Taxation and Growth of Small, Micro and Medium Entreprises Case Study of Selected Smes in Ntungamo Municipality, Uganda

Abstract Small and medium enterprises play a very important role in development of the Ugandan economy. The SMEs sector’s importance in the economic development of any country in recent years cannot be underrated especially with regard to creation of employment, innovation, uplifting the people’s standard of living and financial contribution to the growth of the country’s GDP. This sector’s growth is hindered by the challenges of lack of financial resources to expand, the entrepreneur managerial skills, unskilled labour, production of poor quality goods, lack of market for their products, infrastructure and above all taxation policy which does not favour their growth potential. The study looked at the impact of tax influence on SIVIEs sector growth in Uganda. The study employed descriptive design. Primary data was collected on valuables contributing to tax influence and their effect of the growth of SMEs. A total of 50 respondents were considered out of the entire population in Ntungamo municipality. The study found that there was a significant colTelation between taxation and SMEs sector growth. The study recommends that there be a friendly tax policy for all start-up businesses preferably a tax holiday, or an introduction of a growth limit which can be said to be a level stable enough to sustain tax payment. It also reconunends that, URA; should supply tax assessment forms in time, intensify on the sensitization different tax rates and introduce a scheme that allows taxpayers to pay the tax obligation in instalment to better the profitability of small-scale businesses. There is therefore need for more research on firms~’ management techniques, the role of bookkeeping and profitability of small and micro enterprise.