ABSTRACT

~ax policies that are set by government and tax authorities have influenced small business not

nly in Kampala district but also world over. This research looks at how tax policies have

ffected performance of small businesses in Kampala District, taking Luwafu Parish, Makindye

ivision as focus of study. The study has been presented chapter by chapter basing on the

bjectives stated in chapter one subsection 1.4, which include; determining the effect of tax

ompliance on performance of small business enterprises, determining the effect of tax

dministration on performance of small business enterprises and examining the effect of tax

ssessment on performance of small business enterprises in Luwafu Parish, Makindye division.

The study used both stratified and simple random sampling techniques to draw representative

amples and a sample size of 60 respondents was determined using Slovenes formula. Self

dministered questionnaires were used to obtain response. During this research data was

arefully collected, classified and analyzed using frequency tables and percentages were used to

[etermine reliability of findings.

The findings of the study revealed that there is a relationship between tax policies and

erformance of small business enterprises in Luwafu Parish, Makindye division. In support of

hese findings over 80% of respondents were in strong agreement that; some of the factors that

cad to non-compliance of tax payers include unfavorable policies employed by the government

n these enterprise which include poor administration procedures, over valuation of businesses

luring tax assessments and limited stakeholder involvement. It was on this not that the

esearcher concluded that effective tax policies drafted by the government for small businesses

vould see improvement in their performance and vice-versa. The researcher finally

ecommended that the government and tax authorities in Kampala including I(ampala Capital

Dity Authority (KCCA) should set up policies which are small-tax-payer friendly such as they

~an equally benefit from their businesses. Inclusion of all stake holders and assessing businesses

n the reach of tax payers was some of the recommendations drafted for the government. For

nutual benefit purposes also, small business tax payers have been recommended to remit their

ax dues in time so as the government can be able to extend effective services to them

TABLE OF CONTENTS

)ECLARATION

~PPROVAL Ii

)EDICATION iv

~CKNOWLEDGEMENTS v

~BSTRACT X

~HAPTER ONE 1

NTRODUTION 1

.0 Introduction 1

.1 Background 1

.1 Historical perspective 1

1 .2 Theoretical perspective 2

~bility-To~~Pay theory 2

1 .3 Conceptual perspective 3

.1 .4 Contextual perspective 5

1 .2 Statement of the problem 5

1.3 Purpose of the study 6

1.4 Objectives of the study 6

1 .5 Research questions 6

1 .6 Study hypothesis 6

1 .7 Scope of the study 7

1.7.1 Subject scope 7

1.7.2 Geographical scope 7

1.7.3 Time scope 7

1.8. Significance of the study 7

1 .9 Conceptual Framework 8

vi

‘HAPTER TWO 9

ITERATURE REVIEW .9

.0 Introduction 9

.1 Theoretical Review 9

Lbility-To-Pay theory 9

.2 Conceptual Review 10

.2.1 Tax policies 10

.2.2 Performance of small and medium enterprises 10

.3.1 Tax administration and performance of small businesses 11

.3.2 Tax compliance and performance of small businesses 13

.3.3 Tax assessment and performance of small scale enterprises 15

.4 Concept of Small Scale Enterprises 17

.4. 1 Small Business Emerprises’ Threats 18

.5. The relationship between tax policies and pei~format~ce of small scale enterprises 19

HAPTER THREE 23

~ESEARCH METHODOLOGY 23

.0 Introduction 23

I Research approach 23

.2 Research design 23

.3 Study population 23

.4 Sample size 24

.6 Methods of data collection and instruments 25

.7 Data quality control 25

.7.1 Validity 25

.7.2 Reliability 26

.8 Study variables and measurements 26

VII

.9 Data processing, analysis and presentation

.10 Ethical consideration .~

.1.1 I Study liniitations .27

~I•LAP1’ER. FOUR 28

‘RESENTATION, ANALYSIS AND DISCUSSIONF~D~GS.28

.0 Introduction

.1 Respondents by sex, age group, marital status, education levels and years spent at the in the

•rgaIuzaLIuu 28

•.2 ~ compliance and perforniaiice of ShiEs 33

;l—IAP’l’ER FTYE 40

UMMARY, CONCLUSION AND RECOMMENDATIONS 40

.0 Introduction 40

.1 Findings 40

. 1.1 Findings on tax compliance and sniall business performance 40

. 1.2 Findings on tax administration and small business performance 40

L 1.3 Findings on tax assessment and small business performance 41

L2 Conclusion 41

~2.1 Conclusion on tax compliance and sniall business performance 41

;2.2 Conclusion on tax administration and small business performance 42

;2.3 Conclusion on tax assessment and small business performance 42

;.3 Recomniendation 43

ill Recommendations on tax compliance and small business performance 43

L3.2 Recommendations on tax administration and small business performance 43

5.3.3 Recommendations on tax assessment and small business perfonnance 44

~.EFER.ENCES 46

kPPEl~IDI3C I 49

viii

QUESTIONNAIRE TO THE RESPONDENTS OF SMALL BUSINESS OWNERS IN LUWAFU

ARISH

~- Neutral! Not Sure D~ Disagree 50

ECTION B: TAX ADMINISTRATiON AND PERFORMANCE OF SMALL BUSINESS

~NTERPRISES 51

ECTION B: TAX ASSESSMENT AND PERFORMANCE OF SMALL BUSINESS ENTERPRISES 52

ippendix II: Gant chart 53

(ppendix III: Budget 54