Taxation Policies and Its Effect on the Growth of Small &Medium Size Enterprises in Cameroon in the Midst of the Ongoing Sociopolitical Crisis

Abstract

Tax policies have a great role to play on the growth of small and medium size enterprises in developing countries and Cameroon in particular. The objective of this paper is aimed at assessing the effect of tax policies on the growth of small and medium-sized enterprises in Bamenda Municipality, Northwest Region of Cameroon. Data for this study was collected with the help of questionnaires. A total of 300 questionnaires were distributed to owners of small and medium-sized enterprises in Bamenda municipality, Northwest Region of Cameroon. The data collected was analyzed with the use of SPSS for descriptive statistics, OLS regression and ANOVA. The results reveals that tax policies, including value added tax (VAT), income tax, and excise tax, have a significant impact on the growth of small and medium-sized enterprises (SMEs) in Bamenda. The findings indicate that a unit increase in VAT corresponds to a 0.513 increase in the growth of SMEs, while the impact of income tax is relatively weaker with a 0.082 increase. Similarly, excise tax shows a moderate impact on the growth of SME with a 0.378 increase. Based on the findings, it was recommended that policymakers should carefully evaluate the VAT rates and consider implementing measures that promote a favorable business environment. This may involve reducing VAT rates for SMEs or introducing incentives and exemptions to alleviate the tax burden on these enterprises. Such measures can help stimulate economic activity and encourage SMEs to expand their operations.

Keywords: Value added tax, income tax, excise tax, performance , Small and Medium size enterprise

DOI: 10.7176/RJFA/14-14-03

Publication date:July 31^st 2023