Tax Administration and Entrepreneurial Performance: A Study of SMEs in Uganda

Ismail Kintu,Faisal Buyinza,Yusuf Kiwala

doi:10.5539/ibr.v12n12p39

Abstract

Using the 2013 World Bank Enterprise Survey Data for Uganda, this paper employs the logit and quintile estimation technique to explain the relationship between tax administration and entrepreneurial performance among SMEs in Uganda. The study also employed interviews to obtain expert opinion about tax administration and also explain the results of logit models. Our results indicate that tax rate positively and significantly affect entrepreneurial performance, while tax administration has no effect on entrepreneurial performance. Other key factors that promote entrepreneurial performance include access to credit, firm age, male ownership, training and participation in exporting. Our results suggest that efforts to incentivize and set a conducive tax rate, ease of access to financing and training need to be strengthened for higher entrepreneurial performance among SMEs in Uganda.

Highlights

1.1 Problem IntroductionTax administration is vital for economic performance in both government revenue collection and business performance (Godin & Hindriks, 2015; Kangave, Nakato, Waiswa & Zzimbe, 2016)
After obtaining results of the logit model, interviews were conducted to explain ; how tax administration affect the sales of a firm? How tax rates affect the sales of a firm? And how importers perceive the customs procedures at Uganda boarders? This is sequential explanatory research approach
The effect of tax administration on firm performance is examined taking into account firm and business environment characteristics

Summary

Introduction

1.1 Problem IntroductionTax administration is vital for economic performance in both government revenue collection and business performance (Godin & Hindriks, 2015; Kangave, Nakato, Waiswa & Zzimbe, 2016). There is high compliance encumbrance which tends to divert SMEs resources from entrepreneurial performance It has not yet been established in Uganda’s context whether the wasted time (delayed feedback and delay in understanding customs regulations and procedures) and money while endeavoring to comply for tax can impact on SME innovations, working capital, sales volume and market share. In other words, it is not yet clear whether tax administration can be an obstacle to SMEs’ performance in Uganda, and to what extent it can be. In South Africa’s construction industry, a study by Matarirano, Chiloane-Tsoke and Makina (2019)

Objectives

Methods

Results

Discussion

Conclusion