Effect of taxes on the performance of small and medium enterprises in Uganda

Abstract

The study aimed at identifying the effect of taxes on the performance of SMEs in Uganda using secondary data. Specific objectives were measured; examining the relationship between capital size factors with performance of SMEs in Uganda and examining the relationship between tax system and the performance of SMEs in Uganda. The data was presented at three levels, that is to say univariate analysis, bi- variate analysis and multivariate analysis. The study findings showed that tax administration, size of locality, political instability, business licensing and practices of competitors in the informal sector were found to be statistically insignificant with the performance of SMEs which makes the stated null hypothesis for these variables false and the alternative hypothesis true. However, size of locality, gender of company owner, corruption, political instability, business licensing and Permits were found to be the determinants of SMEs performance in Uganda from the logistic regression model. The researcher recommended as follows; tax regulations governing SMEs should be simplified in order to make compliance easier for them and tax administrators should improve their support services towards SMEs.