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| Taxation And The Development Of Small Businesses In Uganda, A Case Study Of Wakiso District
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Osman Ali Hussein, Magala Muhammed, Prof Edris Kasenene Serugo
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Abstract:
This research study aimed to thoroughly examine how various taxation policies and practices undertaken by both national and local government agencies in Uganda had impacted the development prospects of small businesses operating within Wakiso District, one of the country's most economically vibrant regions located near the capital city of Kampala. A mixed-methods approach was applied whereby quantitative data on trends in small business registration, growth, contributions to employment and revenues over a ten-year period was gathered through a statistical analysis of longitudinal surveys jointly conducted by the Uganda Revenue Authority and the district commercial office. Complementing this, qualitative insights into taxation-related challenges faced by enterprises along with perceptions on policy reforms needed were elicited through in-depth interviews held with owners of over 50 purposively sampled micro, small and medium enterprises across varied sectors. The analyses revealed that although the district had witnessed substantial increases in numbers of registered small firms and jobs created during the review timeframe overall, inconsistent tax administration, lack of supportive incentives as well as disproportionately high compliance costs had constrained greater expansion, productivity and formalization amongst most enterprises. From the findings, a bigger proportion of respondents agreed that tax holidays have helped my business to grow and expand as shown by mean = 3.68 and standard deviation = 0.929. In addition, tax incentives have stimulated the growth and expansion of Small businesses in Uganda which was established by the majority of the respondents according to the mean = 4.41 and SD = 0.726. Interviewees frequently pointed to difficulties in navigating the complexity of tax laws, unfair penalties imposed for minor errors and dual licensing requirements at the local level as key hindrances that stifled growth potentials and encouraged some level of underground operations. They further lamented inadequate public-private consultations and absence of tax reliefs focusing on enhanced technology absorption, skills upgrading or capital investments necessary to bolster competitiveness.
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