The Effect of Tax Payment on the Performance of SMEs: The Case of Selected SMEs in Ga West Municipal Assembly

Abstract

Taxation plays important role in the development of every economy as well as the growth of Small and Medium Enterprises (SMEs). In a middle-income country like Ghana, the role of SMEs is critical in pushing the socio-economic development agenda of the country further. Therefore, alignment of the tax system to the specific SME growth needs can be considered an important agenda for the policy makers. Keeping this issue at focus, the study aimed to explore the managers/ executive officers’ perception of the tax system in Ghana on the profitability of their businesses. The study is based on a survey of 102 managers/ Executive officers of the selected SMEs in the Ga West Municipality in the Greater Accra region of Ghana. The survey was administered using questionnaire and interview with the selected respondents. Data was analyzed by descriptive analysis method, correlation and regression analysis and findings were presented in terms of frequencies and percentage analysis. Findings indicate that majority of the respondents perceive the adverse impact of existing tax policies on the growth of SMEs and suggest for reforming the tax policies in the Country. The findings would help the stakeholders in designing measures to align the tax system to SMEs in a more effective manner.

Keywords: Small and Medium Enterprises (SMEs), tax system, Ghana.