The study aimed at taxation and the development of small businesses in uganda, a case study of Iganga district and it was guided by the following objectives; To examine the relationship between tax compliance and the business development of small businesses in Iganga district, to assess the relationship between tax rates and the business development of small businesses in Iganga district and to analyze the relationship between tax incentives and the business development of small businesses in Iganga district. This study adopted a design known as cross-sectional analysis. The research was suited within the provisions of cross-sectional research design because the researcher gathered data and report the state in which things are without changing any variables. The study population concentrated on Managers and employees of small businesses in Iganga District. The study area was limited to this one SB in Iganga district since the majority of the small businesses are established in urban areas. The findings revealed that tax incentives (Beta= .459, Sig. < .000) was a better predictor of the performance of SB’s and this was followed by tax rates (Beta = .311, Sig. < .005), and lastly tax compliance with (Beta=.171, Sig.<.031). This implies that strengthening and improving the existing taxation policies relating to tax compliance, tax rates and tax incentives, the performance of small businesses will improve in Uganda. During the study, it was found out that in order to promote the performance of small businesses in Similarly, the findings from interviews indicated that as a result of tax incentives, businesses have benefitted from tax exemption like With Holding Tax exemption and issued with a tax exemption certificate from URA since such businesses have demonstrated a good track record of paying the taxes on time.