The study was carried out to find out the impact of taxation policy on the performance of small business enterprises in Uganda, taking a case study of Nakawa central market. The study aimed at assessing the relationship between taxation policy and the performance of small business enterprises in Nakawa division, finding out the effect of taxation on the profitability of small business enterprises in Nakawa division central market. The study applied both qualitative and quantitative research designs where interviews and questionnaires were used. Data was collected from both primary and secondary sources. Data was processed and analyzed using formal tables, pie charts, narratives texts, and correlation to find out the relationship between taxation policy and the performance of small business enterprises. A total of 60 respondents were considered out of the entire population in the market. The testing of the relationship between the variables was tested using Pearson correlation coefficient. This was used because the taxes and business performance were numerical. From table above, it is clearly indicated that there is a strong relationship between performance of small-scale businesses and the average amount of tax paid in Nakawa market. This indicated by positive results of Pearson Correlation, where r = 0.811, p<.01. It therefore implied that taxation strongly affects the performance of small businesses and tax assessors should always do their performance before taxing them. Recommendation on the effect of taxes included; improvement on the method of collecting taxes, educating the business community about the different tax rates, introducing a scheme that allows tax payers to pay the tax obligations in installment, and finding a way of assessing the tax the SBs should pay early in the financial year in order to give enough time to the business to pay their duties rather than make an assessment and demand for payment spontaneously.