Critical Analysis of the Taxation Policy on Small Businesses and Entrepreneurial Enterprises in Uganda

Abstract

The Ugandan government has been conducting tax policy reforms to create entrepreneurship conditions for the growth of small and medium enterprises (SMEs). SMEs play a very important role in the development of economies. Taxation and tax regimes are used by government to provide means for small businesses to participate in economic growth. Therefore, the paper critically analyses the taxation policy on small businesses and entrepreneurial enterprises in Uganda. The specific objectives of this paper are: To examine tax treatment on the performance of SMEs in Uganda; To find out the influence of taxation policy on small business and entrepreneurial enterprises in Uganda; and To find out if tax payers are aware of all their tax obligations and policies. The research is primarily carried out in kampala district and it covers four markets of Nakasero in central division, Nakawa in Nakawa division, Kasubi in Lubaga division and kalarwe in Kawempe division.  The respondents were small business owners and in operation between 2005 and 2014. A mixed method of both qualitative and quantitative was employed. 50 respondents were considered out of the entire population in each market, and a total of 200 respondents selected for this paper. Data collected was analyzed using SPSS Version 17. The result of the research will benefit small business and entrepreneurial enterprises owners under study to know the defects of taxation and this will help to lobby with the government. The findings will assist the policy makers to amend the income tax law so as to make it friendly to small businesses.

Keywords: Entrepreneurship, small businesses, entrepreneurial enterprises, taxation, tax policy, tax relief, tax system