Impact of Tax on Performance of Small Medium Enterprises in Uganda: Case Study of Mulago Washing Bay

Abstract

The main objective of this research was to find the impact of tax on the performance of SMEs in Uganda. The study used a cross section study design and it used primary data collected from Mulago as the case study using a questionnaire as a tool for data collection. Data was analyzed at three levels “univariate analysis where percentage distribution tables were used, bivariate where Pearson‟s chi-square test was used and multivariate which aimed at establishing the determinants using odd ratio”. Findings of the study indicated that 56.58% their washing bays performed poorly since they earned less than 50,000shs per day, 81.58% and the biggest proportion of the respondents (46.05%) was in the age group of 20-30 years, 48.68% were currently cohabiting, 48.68% of the respondents acquired no education level, 52.63% agreed that their washing bays were assessed for tax and 64.47% of the respondents kept tax recodes for their washing bays. Results also indicated 47.37% agreed that tax has contributed to the development of infrastructures in the country, 47.37% were uncertain whether tax contributes to health of the people in the country, 43.42% agreed that tax contributes to market widening, 42.11% disagreed of tax contributing to their economic, 69.74% agreed that tax has affected the performance of their washing bays and 67.11% were aware of tax laws and regulations. From bivariate analysis results indicated that effect of a tax, respondent paying tax and awareness of tax laws and regulation were significantly associated with the performance of SMEs in Mulago as chi-square p-value was less than 0.05 and from the logistic regression it can be concluded that none of the study variable was determinate of performance of SMEs in Mulago even the tax which was expected. Their for public awareness on laws and regulation of tax, reduction of tax rate and even use of progressive tax policies in the country are recommended for this study result.