The major objective of this study lied in finding out whether there was a relationship between taxation and performance of small-scale businesses in Kisoro municipality, Kisoro district. Other objectives included: To determine the level of taxation in Kisoro district, Kisoro municipality and to determine the level of small-scale businesses in Kisoro municipality, Kisoro district. The study included 78 respondents who were small scale traders, 01 local council III C/man, and 01 as commercial officer of the District SPSS Software was used to analyze data in the study. It was found out is a very strong positive relationship between Taxation and Performance of small-scale businesses at r = 0.885 and since the sig. value (.000) was far less than 0.01, which is the maximum level of significance required declaring a significant relationship between Taxation and Performance of small-scale businesses, this implies that the level of Taxation greatly affects the level of Performance of small-scale businesses. The respondents were asked the types of businesses in Kisoro Municipality and 55.0% of the study respondents were operating retail businesses, 26.7% were operating wholesale businesses and only 18.3% of the sampled respondents in Kisoro Municipality were running/operating medium enterprises. The researcher also found out that the reasons behind as to why most people in Kisoro municipality operate retail businesses includes; retail businesses require less capital to start up, they don’t need a lot of labour, they bring profits easily and they are easy to manage. The researcher found out that most people in this area had spent more than ten years while operating small scale businesses in Kisoro Municipality. The researcher recommended the government to give directives to districts so that they reduce on the taxes that the impose on the local people. The researcher recommends the small-scale business owners to invest in much capital in their businesses so that they grow and start operate on a large scale