Tax policy and performance of the service sector among SMES in Uganda : a case study of Nakawa division.

Abstract

Using a sample of 229 Small and Medium Enterprises (SMEs) in Nakawa division, this study analyzed the effect of tax policy on the performance of the service sector among SMEs in Uganda. The study used a quantitative approach to explore the relationship between tax policy and performance of SMEs. Findings revealed that a strong positive correlation (0.978) between technical tax policies and the performance of SMEs, and for every unit increase in technical tax policies, SME performance increases by 0.682 units. Besides administrative tax policies, performance of SMEs can also be affected by market competition, human resources, regulatory environment, and technological advancement. Based on the results, it is recommended that policymakers focus on improving administrative tax policies to positively affect the performance of the service sector among SMEs. This could involve streamlining tax filing procedures, reducing the number of taxes imposed on SMEs, and providing clear and concise guidelines for tax compliance.