Title: Tax Administration and Financial Performance of Small and Medium Enterprises in Nakawa Division, Kampala, Uganda
Authors: Emurwon Paul , Sendagi Mohammed, Rutaro Abas
Volume: 8
Issue: 11
Pages: 210-221
Publication Date: 2024/11/28
Abstract:
This study examined the relationship between tax administration and financial performance of Small and Medium Enterprises in Uganda. Specifically, the study assessed the relationship between tax compliance; tax incentives and the financial performance of SMEs. The study adopted the descriptive study design based on the quantitative and qualitative approaches. The study population of 17,573 registered SMEs owners in Nakawa was used to select a sample size of 377 respondents using simple random sampling. Data were collected using the self-administered questionnaire and interview guide. The study findings revealed that tax compliance has a statistically significantly moderate positive effect on the performance of SMEs since p - value (.000) is less that the significance level and the correlation coefficient (0.689). Tax rates have a statistically significant strong positive effect on the performance of SMEs since p - value (.000) is less that the significance level and the correlation coefficient (0.689). Tax incentives have a significant strong positive effect on the performance of SMEs, since the p - value (.000) is less than the significance level and the correlation coefficient (0.776). The study concluded that tax compliance, tax rates, and tax incentives have a statistically significant positive influence on the performance of SMEs. The study recommended that; strengthening the system of taxation through having a simplified system of taxation that can support SME tax payers to meet their tax duties; designing effective tax rates that are not based on the taxable profits as demarcated in the law but on an economic measure which includes the impact of the tax base; strengthening tax incentives to support infant small and medium firms so as to stimulate the performance of SMEs in the economy.