The Assessment of Taxation on Performance of Micro and Small Enterprise in the Case of Nedjo Town

Abstract

Micro and small enterprises (MSEs) are being considered as a vital to transform Ethiopia from dependence on agriculture. Accordingly, a number of MSEs policy documents sand strategies are promulgated and implemented since 2002. Nevertheless, the MSEs in the national development remains far below expectations. This is because the sector is plugged in a number of performance constraints. This study is entitled the Assessment of taxation on performance of micro and small enterprise (MSE) in Nedjo town. The main objective of this study is to assess the taxation on performance of micro and small enterprise in the case of Nedjo town using descriptive research design. The total population of the study is 94 MSE firms running their business in Nedjo town which are considered as the population for data collection. The study used stratified sampling procedures using the five sectors of the MSE firms as a stratum. In order to collect data, most MSE owners working in the position of manager and few MSE firm owner that work in the position accountants were contacted for data collection where MSE firms’ managers were not available at the time of data collection. Structured and standardized questionnaire is adapted from the work of previous researchers and data was analyzed by using statistical package for social science. The finding shows that age of respondents, tax system, tax rate, tax administration, tax level and tax education and training shows statistically significant positive impact on the performance of the MSE firms in correlation analysis. Also, the study found sex of respondents, age of respondents, educational status of respondents, tax system, tax administration, tax level and training shows a significant positive Assessment whereas tax compliance cost shows a significant negative Assessment on the performance of the MSE firms in regression analysis. Finally, the study recommended that tax administrators and tax policy makers are advised to improve existing tax system, tax rate, tax administration system, tax level, tax compliance costs as well as tax education and training so as to increase the performance of the MSE firms in the study area.

Keywords:  impact, MSE, Nedjo, performance, taxation,

DOI: 10.7176/EJBM/12-34-06

Publication date: December 31^st 2020