The impact of taxes on the performance of Micro Enterprises
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Date
2024-09-09
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Publisher
UGANDA CHRISTIAN UNIVERSITY
Abstract
The study went out to investigate the impact of taxes on the performance of Micro
Enterprises in Nsuube-Buguju Parish, Mukono TC Division. The study flowed following
these three objectives: the relationship between tax rates and the performance of Micro
Enterprises, secondly, the relationship between tax incentives and the performance of
Micro Enterprises and lastly, the relationship between tax compliance and the
performance of Micro Enterprises in Buguju.
The study was carried out using explanatory research design where quantitative
research approach was utilized. Stratified sampling method and purposive sampling
method was used to get a sample of 80 respondents who were Micro Enterprises owners
and managers of the selected businesses dealing in segmented businesses and assorted
merchandize in Buguju village, and these responded to the questionnaires that were
used to collect data.
The study found that tax policies have a big influence on the growth and sustainability
of micro enterprises. It is also encouraging to see that most respondents concurred that
the tax rates were explicitly stated and that the organizations running the Micro
Enterprises were aware of the tax payment procedures. However, it raises issues with
the perception that taxes are unsupportable by many Micro Enterprise owners, primarily
because they are regressive, which has an impact on the bases from which revenues are
drawn. In addition, the region's micro enterprises' capacity to grow and flourish is
hampered by the apparent lack of tax incentives for them. Therefore, tax compliance is
essential to Micro Enterprises' success. In fact, there is a positive association between
the performance of Micro Enterprises and their owners' consistent timely filing of
returns, payment of taxes, and adherence to tax legislation.
In the end, it produced a lengthy list of suggestions aimed at promoting and reducing
the tax burden on micro-enterprises. These included streamlining tax laws, developing
targeted tax incentives, enhancing tax education initiatives, changing regressive tax
laws, fostering greater collaboration between tax authorities and micro-enterprises,
offering regular policy reviews, and even appointing a tax ombudsman specifically for
micro-enterprises. By lowering taxes, offering incentives, educating Micro Enterprises,
and promoting collaboration, policymakers can further foster this atmosphere and help
these businesses grow, innovate, and comply with regulations—thereby addressing
some of their very particular problems.