TAXATION AND PERFORMANCE OF SMAll SCAlE BUSINESSES IN SOROTI CENTRAl MARKET, SOROTI DISTRICT, UGANDA

ABSTRACT

This study is set to empirically establish the impact of taxation on the performance of small

scale businesses in Soroti Central market in Soroti UGANDA. The purpose of this study was

to find out whether the amount of tax paid could affect the profits and performance of the

small scale businesses. In order to establish the relationship the researcher assumed that

other related factors were to make significant effect on profits and performance of small

businesses.

While tax has been embraced and described by the Government as "Taxes made easy," the

business community believe that it has undesirable effects on their businesses like; High prices,

low sales and low profits. Interviews, questionnaires and observation helped the researcher to

collect the necessary data.

The data was mainly collected using questionnaires, interviews and analysis using

relationships. Books and journals were also used to collect information on how other authors

and researchers view the subject of taxation and how it affects the performance of

businesses.

From the data analyzed, there was a significant relationship between the amount of tax paid

and the performance of the small businesses in Soroti central market, such as high Tax rate

resulting in increase in prices of goods and services, low sales, low profits, hence provision of

poor quality goods and services due to high tax rates.

Moderate rate of Tax for efficiency and effectiveness of the businesses and the assessment of

taxes should be on the ability to pay and therefore extra effort and emphasis was put on tax

payers' education and awareness to fully understand tax and provide the business people

with skills for systematic bookkeeping.