The impact of taxation on the performance of small scale business enterprises in Uganda: a case of Bwaise town council

Abstract

The purpose of the study was to examine the relationship between taxation and the performance of small-scale business enterprises in Uganda. The specific objectives were assessing the performance of the informal sector in Bwaise Division, to find out if tax payers are aware of all their tax obligations and policies, and to find out problems affecting tax payers and their business .In order to achieve the above objectives data was got from primary data source. Primary data was collected through administering questionnaires to sample 60 respondents in area of Bwaise Town. Data was analysed using SPSS and The results revealed that the impact of taxes on the performance of the SSBs is quite significant. The study further revealed that taxes mainly affect the performance of SSBs through lost sales during closure of the business premises by URA, the loss of machinery and equipment due to delay in remitting the tax and the loss of capital due to the fines imposed by URA onto SSBs that default on their tax obligation. Recommendations made included the following; Ensure that taxation of the informal sector distinguishes between those who are earning too little to meet VAT or income tax thresholds and those hiding in the informal sector to evade taxes Improve transparency, with public postings of rates payable and standardized receipts. Those paying tax should always demand and save receipts, which can be useful in holding local officials accountable for use of the revenue raised. Ensure that there is sufficient skilled revenue authority capacity to implement the taxation.