Taxation and Growth of Small Scale Business Enterprises in Uganda: A Case Study of Nakasero Market, Kampala District

TABLE OF CONTENT

DECLARATION ............................................................................................................................. i

APPROVAL ................................................................................................................................... ii

DEDICATION ............................................................................................................................... iii

ACKNOWLEDGEMENT ............................................................................................................. iv

LIST OF ABBREVIATIONS ......................................................................................................... v

TABLE OF CONTENT ................................................................................................................. vi

LIST OF FIGURES ....................................................................................................................... xi

LIST OF TABLES ........................................................................................................................ xii

ABSTRACT ................................................................................................................................ xiv

CHAPTER ONE ............................................................................................................................ 1

INTRODUCTION ......................................................................................................................... 1

1.0 Introduction ................................................................................................................................ l

1.1 Back ground of the study ........................................................................................................... 1

1.2 Statement of the problem ........................................................................................................... 2

1.3 Purpose of the study ................................................................................................................... 3

1.4 Objectives of the study .............................................................................................................. 3

1.5 Research questions ..................................................................................................................... 3

1.6Research hypothesis .................................................................................................................... 3

1.6.1 The null hypothesis ................................................................................................................. 3

1.6.2 The alternative hypothesis ...................................................................................................... 4

1.7 Scope of the study ...................................................................................................................... 4

1.7.1 Geographical scope ................................................................................................................. 4

1. 7 .2Time scope ............................................................................................................................... 4

1.7.3 Content scope .......................................................................................................................... 4

1.7.4 Demographic scope ................................................................................................................ 4

1.8 Significance of the study ........................................................................................................... 4

1.9 Limitations of the Study ............................................................................................................ 5

1.10 Conceptual Framework ............................................................................................................ 5

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1.11 operational definitions ............................................................................................................. 6

1.11.1 Small scale business enterprises ........................................................................................... 6

1.11.2 Entrepreneur ......................................................................................................................... 6

1. 11.13 Performance of small scale business enterprises ................................................................ 7

CHAPTER TWO ........................................................................................................................... 8

LITERATURE REVIEW ............................................................................................................. 8

2.0 Introduction ................................................................................................................................ 8

2.1 The establishment of the relationship between taxation and growth of the small scale

business enterprises ......................................................................................................................... 8

2.2 Taxation and performance of small scale business enterprises ............................................... 11

2.3 The problems encountered by small scale business enterprise while complying with taxation

may include among others; ............................................................................................................ 14

2.4 Conclusion ............................................................................................................................... 15

CHAPTER THREE ..................................................................................................................... 17

METHODOLOGY ...................................................................................................................... 17

3.0 Introduction .............................................................................................................................. 17

3.1 Research design ....................................................................................................................... 17

3.2 Study population ...................................................................................................................... 17

3.3 Sample size and selection method ........................................................................................... 18

3.4 Sampling techniques and procedure ........................................................................................ 18

3.5 Data collection methods and instrument.. ................................................................................ 18

3.6 Data quality control (Validity and reliability) ......................................................................... 19

3.7 Procedure of Data collection ................................................................................................... 19

3.8 Sources of data ......................................................................................................................... 19

3.8.1 Primary data source .............................................................................................................. 19

3.8.2 Secondary data source .......................................................................................................... 19

3.9 Data collection instruments ..................................................................................................... 19

3.9.1 Questionnaire method ........................................................................................................... 20

3.9.2 Interview method .................................................................................................................. 20

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3.9.3 Observation inethod .............................................................................................................. 20

3.10 Data analysis .......................................................................................................................... 20

3.11 Measurement ofvariables ...................................................................................................... 21

3.12 Ethical consideration ............................................................................................................. 21

CHAPTER FOUR ....................................................................................................................... 22

PRESENTATION, ANALYSING AND DISCUSSION OF RESEARCH FINDINGS ........ 22

4.0 Introduction .............................................................................................................................. 22

4.1 Respondents bio-data ............................................................................................................... 22

4.1.1 Gender of respondents .......................................................................................................... 22

4.1.2 Age of respondents ............................................................................................................... 23

4.1.3 Level of Education ................................................................................................................ 24

4.1.4 Type of business including its products services sold/offered in by the respondents ............ i

4.1.3 Legal status of the business .................................................................................................. 27

4.2 Finding the relationship between taxation and the growth of the small scale business

enterprises in Nakasero Market. .................................................................................................... 28

4.2.1 High taxes are good for the development of the economy .................................................. .28

4.2.2 Taxes levied to businesses are in line with the businesses structure .................................... 28

4.2.3 The taxation policy of Uganda favors the growth of economic growth ............................... 29

4.2.4 The taxes collected have been put to use to create a stable business environment. ............. 30

4.2.5 Small Scale Businesses are growth depends on low rates of tax .......................................... 31

4.2.6 Small Scale business growth depends on taxation policies .................................................. 31

4.2. 7 Small scale business enterprises are growing because of efficient revenue use ................... 32

4.2.8 Some Small Scale businesses are favored by government in terms of business expansion. 33

4.2.9 Small scale business enterprises growth depends on the proper allocation of resources by

the government. ............................................................................................................................. 34

4.3 Finding the performance of small scale business enterprises .................................................. 36

4.3.1 Average Daily Sales ............................................................................................................. 36

4.3.2 Daily Cash out flow of the small scale business enterprises ................................................ 37

4.3.3 The expected return from the capital employed in some of the small scale business

enterprises ...................................................................................................................................... 3 8

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4.3.4 The contribution of URA activities to the daily operations of small scale business

enterprises ...................................................................................................................................... 40

URA activities have supported the improvement of small scale businesses ................................ .40

4.3.5 URA activities will attract more small scale business enterprises set up in future ............. .40

4.4 Identifying the problems that affect the tax payers and their businesses in Nakasero market.

·····················································································································································4.4.1. Findings on the problems that affect tax payers and their businesses in Nakasero ............ .41 I t,

4.4.2 Small scale businesses which deal in local products are affected by competition with cheap

imports ........................................................................................................................................... 42 I

4.4.3 Lack of skills in business management, load shedding and poor or low tax education is

iinpeding our operation .................................................................................................................. 43

4.5 Other problems faced ............................................................................................................... 43

4.6 Requests from tax collectors and tax payers ........................................................................... .44

CHAPTER FIVE ......................................................................................................................... 45

DISCUSSSION OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ............ .45

5.0 Introduction .............................................................................................................................. 45

5.1 Discussion of major findings ................................................................................................... 45

5.2 Findings on the relationship between Taxation and growth of Small Scale Business

Enterprises ..................................................................................................................................... 45

5.2.2 Findings on the performance of small scale business enterprises ....................................... .46

5.2.3 Findings on the problems affecting the small scale business enterprises ............................ .47

5.3 Conclusion ............................................................................................................................... 47

5.4 Recommendations .................................................................................................................... 47

5.5 Areas of further research ......................................................................................................... 49

REFERENCES .............................................................................................................................. 50

APPENDIX: 1 ............................................................................................................................... 56 I

I

KAMPALA INTERNATIONAL UNIVERSITY ......................................................................... 56

Questionnaire/Research instrument ............................................................................................... 56

APPENDIX: II ............................................................................................................................... 62