Taxation in Uganda is based on system that existed in Britain as it was a British colony. This also applied to other colonies elsewhere and for East Africa, one tax system operated under British administration. This process began in 1900 with the hut tax regulation which imposed a standard charge for every hut/dwelling. All taxes including income tax came under the umbrella of the URA. The study was guided by the following objectives; To establish the types of taxes levied on small and medium sized enterprises in Kyotera Town Kabira sub county central Division, to determine the relationship between income tax and profitability levels of SIME's in Kyotera Town Kabira sub county central Division and to assess other factors that affect the profitability levels of SMEs in Kyotera Town Kabira sub county central Division. The study population mostly comprised of Vendors and traders of small-scale businesses (SSBs) in Kyotera town. The target population is estimated to over 50.000 vendors/traders in Kyotera town, of whom approximately 70 percent are women. The data was collected from the 1,000 respondents (small scale business owners) from Kyotera town. The From the findings, 88% of the taxes and Profitability of SIME"s in Kyotera town in Kampala central division was represented by the R2=0.88. This therefore meant that other factors not studied in this research contributed 12% of the accountability giving room for further research to investigate the other factors (12%) that affect tax imposition on SMEs. URA should improve on the methods of collecting taxes by designing and updating simplified system, simplicity of the system; the government should harmonize the tax base by defining sanctions for taxpayer's non-compliance.