The effect of taxation on the performance of small and medium enterprises

Abstract

The study was carried out to find out the effect of taxation on the performance of SMES in Kampala district; taking a case study of Kampala old taxi park. To assess the effect of tax rates on the performance of SMES, to find out the relationship between the tax base on the performance of SMES, to find out if SMES owners are aware of all their tax obligations and the policies. The study applied both qualitative and quantitative approaches with a case study design where interviews and questionnaires were used for data collection. The study was from a sample size of 44 respondents. From the findings, the study revealed that statistically significant correlation existed between taxation and performance of SMES with a positive relationship (r=262, N=44, P>.024). This indicates that an increase or decrease in taxation significantly relates to an increase or decrease in the performance of SMES. Recommendations included: The government needs to sensitize the SMES about the taxes so as to improve on the performance,SMES should be levied lower amounts of taxes in terms of tax rates so that they are able to have enough funds for their activities which will lead to business growth.