The Effect of Tax Policies on the Financial Performance of Small and Medium-Size Enterprises in Mukono Central Division

Abstract

The purpose of the study was to assess the effect of tax policies on the financial performance of small and medium size enterprises in Mukono central division. The research was steered by three distinctive objectives namely; to examine the effect of tax administration on the performance of small and medium enterprises, to determine the effect of tax compliance on the performance of small and medium enterprises, to examine the effect of tax assessment on performance of small and medium enterprises. The study used a cross-sectional research design and focused on Paris Corner Supermarket Ltd. The study population was 41 and the sample size was 36 respondents who were determined using the Krejcie and Morgan table. The respondents were also chosen purposively due to the required information. The study used both qualitative and quantitative research approaches for data collection. Interpretation of data was made to describe the research findings. The study findings revealed that tax policies actually have an effect on financial performance of small and medium scale businesses. All respondents agreed that efficient and effective tax policies are favorable to the survival of small and medium scale businesses as they are easy to understand and comply with since they allow business men to plan accordingly and avoid unnecessary or unexpected expenses. In due regard, the study recommends that business men should have knowledge about current tax laws and employ managers who as well have information regarding tax laws and understand them to avoid incurring unnecessary costs related to fines and penalties that impact their financial performance.