The effect of taxation policies on the financial performance of small and medium enterprises in Hoima District: a case of Hoima Municipality (Mparo Division)

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Kampala International University, College of Economics & management.
The serious decline in financial performance of small enterprises in recent years had led to a decrease in profit available for tax obligation to the government. The need for small business enterprises to generate more returns from its internal sources has therefore become a matter of extreme urgency which has been linked with taxation of small business enterprise, especially in developing countries. Failure of small business enterprise ha grow high, approximately by 80% of the business closed down before the 5th anniversary as a result of tax related issues, coming from multiple taxations to enormous tax burdens. The study aimed to examine the effect of taxation policies on financial performance of small business enterprises in Hoima district, Mparo division. To achieve the study aims, the following specific objective was used, to determine the effect of level of taxation awareness and knowledge on financial performance of SMEs in Mparo division. To determine the effect of tax administration on financial performance of SMEs in Mparo, to determine the effect of tax rate on financial performance of SMEs in Mparo. Descriptive survey design with both qualitative and quantitative technique was used for the study. Both qualitative and quantitative techniques were collected. The target population was 36 SMEs in Hoima district. The study used purposive sampling techniques. The study used questionnaire to collect data. Data was analyzed using descriptive statistics, correlations, and linear regressions analysis. Correlation analysis and regression analysis was used to determine the relationship between taxation and financial performance. The study found that business entity is aware of the consequences of failing to pay tax obligations in time, the findings indicated that tax administration improve tax payer’s convenience in tax assessment. The Equality of tax administration services provides the largest marginal revenues by reducing tax gaps. The study concluded that tax is a tool for fiscal policy employed by the government to influence the business negatively or positively depending on the nature of business activities in a country. This study recommended that taxpayers should have more Information about taxation not only awareness. There is need to conduct further study on tax awareness/knowledge on financial performance on other sectors.
A research report submitted to the College of Economics and Management for the requirements in partial fulfillment for the Award of Bachelor Degree of Business Administration in accounting and finance of Kampala international university
Taxation Policies, Financial Performance, Small and Medium Enterprises