Effects of taxes on the performance of small and medium size enterprises (SMEs) in Nakawa division-Kampala. a case of Naguru 1 parish

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Kampala International University, College of Economics and Management
In the wake of the recent business collapses in Uganda and elsewhere, attention has been drawn to the impact of taxation on the perfom1ance of businesses. This study contributes towards the debate on the impact of taxation on small business performance by providing evidence regarding the relationship between Value Added tax, import duties, Business Income tax, and small business performance with specific reference to the period between 2005 and 20 I 0. Data for the study was also collected through the use of secondary sources of information like textbooks, journals, reports and the internet. Works of different authors who have written on the topic of taxation were used to improve on the problem analysis and consistence. Primary data was collected from a sample size of 30 respondents of Naguru parish in Nakawa division with the use of questionnaires and interview guides. This sample was selected using the convenience sampling technique. Quantitative and qualitative research designs were used to collect and analyse the data. Data was also analyzed with the use of tables, charts, and percentages. The results showed that Value Added tax, import duties and Business Income tax actually affect the efficiency and effectiveness of Small Enterprises by increasing costs of operation, reducing volume of sales which in turn reduces profitability levels thus limiting the level of expansion. These effects were consistent with what other authors suggested. However, there are many aspects of taxation import from Value Added tax, Business Income tax and import duties that may affect both the performance of Small Scale Enterprises. Therefore, further research is suggested on the impact of tax collection methods, tax assessment methods and taxation policies on the performance of Small Scale Enterprises and also on the revenue collected.
A research report submitted to the College of Economics and Management in partial fulfillment for the requirements for the Award of a Bachelor's Degree in Business Administration of Kampala International University Uganda
Taxes, Performance, SMEs