The study aimed at the effect of taxation and the development of small businesses in Uganda with a case study of wakiso district and it was guided by the following objectives; To examine the relationship between tax compliance and the business development of Small businesses in Wakiso district, to assess the relationship between tax rates and the business development of Small businesses in Wakiso district and to analyze the relationship between tax incentives and the business development of Small businesses in Wakiso district. The study population concentrated on Managers and employees of Small businesses in Wakiso District. The study area was limited to this one SB in Wakiso district since the majority of the Small businesses are established in urban areas. Self-Administered Questionnaires (SAQ) were employed to gather data from the study elements in a structured manner. SAQs with one open ended question per section was designed for SB employees to give additional or express their mind while the rest was close ended aimed at testing perception using a five-point like scale measuring from Strongly Disagree as response 1, Disagree as response 2, Not sure as response 3 Agree as response 4 and Strongly Agree as response 5 for easy measurements of variables and data was also imported to SPSS version 23 statistical software for investigation. The study findings revealed that members of the small and medium enterprises could not understand the tax laws and regulations in Uganda which is represented by the mean score of 2.24 and standard deviation of 0.711. Furthermore, most of the respondents disagreed (mean =2.45; SD = 0.710) that they can interpret tax laws and compute tax liabilities. This shows that the majority of the respondents do not have sufficient tax knowledge regarding the when to pay taxes and in what proportions. From recommendations, there should be reduced tax burden on these businesses and enabled them to reinvest and expand businesses and thus, fueling the prosperity and performance of Small businesses in Uganda.