TAX ALLOWANCES AND GROWTH OF SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs) IN UGANDA A CASE OF SELECTED SMES IN NTUNGAMO MUNICIPALITY-NTUNGAMO DISTRICT. A CROSS-SECTIONAL STUDY

Abstract

Background:

The study assessed the effect of Tax allowances on the growth of Small and Medium-Sized Enterprises (SMEs). 

Methodology:

The study adopted descriptive and cross-sectional research designs based on both quantitative and qualitative approaches. A sample size of 118 respondents was used from a study population of 170. The questionnaire was the main instrument of data collection. The analysis of coefficients of variations which aimed at establishing the extent of influences of the independent variables;

Results:

 It was established that there is a strong positive relationship between tax allowance and the growth of SMEs of r= .735** meaning that when tax allowances increase, the growth of SMEs improves. When tax allowances are reduced, the growth of SMEs will also be reduced. The adjusted coefficient of determination (Adj R Squared) of 0.535 implied that a tax allowance explains the growth of SMEs by 53.5%. Hence tax allowance has a positive effect on the growth of SMEs.

Conclusion:

The study concludes that Tax allowances play a vital role in ensuring that small and medium enterprises thrive because the central government has made available tax allowances for pioneer companies, and the government also grants several general and industry-specific incentives. 

Recommendation:

The study recommends that the Government should promote the growth of small and medium enterprises by creating the necessary enabling frameworks to relax the burden of regulating measures and ensure that their efforts are geared towards granting tax incentives to micro, small, and medium enterprises.