MJAMR

Taxation Policies And The Development Of Small Businesses. A Case Study Of Namungoona Lubaga Division, Kampala

Shema Amos, Babirye Shamirah


Abstract

This study examined how taxation policies impacted the development of small businesses in the Namungoona division of Kampala, Uganda. As micro, small and medium enterprises employ the majority of private sector workers yet face numerous operational challenges, understanding their tax experiences and perspectives provides valuable insights for balancing revenue needs with business viability. The objectives were to evaluate businesses’ tax compliance processes and costs over the past year, ascertain the most pressing tax-related difficulties encountered, and solicit policy reform recommendations to support their growth requirements. A mixed methods explanatory research design was utilized. Quantitative data was collected through a survey distributed to 10 purposively sampled businesses across various industries in Namungoona. Qualitative data was also gathered through in-depth interviews with 3 business owners who had been in operation for at least three years. Following data collection in May 2022, survey responses were entered into SPSS software and analyzed using descriptive statistics, while interviews were transcribed, coded and thematically analyzed with NVivo. The findings revealed complex regulatory procedures absorbed an average of 200 working hours annually on tax activities alone. Over 70% of businesses reported taxes as one of their top three difficulties, citing uneven administration, unclear guidelines and disproportionate compliance costs relative to firm size. Interview themes emphasized the need for simplified, predictable tax systems that incentivized formalization and capacity building for MSME growth. The findings further revealed that tax rates have a significant effect on the development of SMEs in Namungoona Lubaga division since p – value (.000) is less that the significance level. The correlation coefficient (0.689) shows a strong positive relationship between tax rates and the development of SMEs in Namungoona Lubaga division. The study recommends that the government of Uganda should design an effective tax rate in such a way that it is not based on the taxable profits as demarcated in the law but on an economic measure which includes the impact of the tax base.

Keywords

Taxation Policies Development and Small Businesses
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Shema Amos & Babirye Shamirah (2024). Taxation Policies And The Development Of Small Businesses. A Case Study Of Namungoona Lubaga Division, Kampala. Metropolitan Journal of Academic Multidisciplinary Research, 3(7). https://journals.miu.ac.ug/pages/article.php?article_id=1396

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