the impact of taxation policy and profitability of small scale enterprises in uganda a case of numa feeds mbarara municipality

Description

This study was to establish the relationship between taxation policy and profitability organizations in Uganda while considering Numa feeds in Mbarara municipality as the case study, Mbarara district. The study aimed at assessing the profitability of business enterprises in Mbarara municipality; finding out if taxpayers are aware of all their tax obligations, know how income tax is administered, policies and problems affecting them as well as their businesses. The study was guided by the following research objectives; to establish finding out the effect of income tax on profitability of small scale enterprises, the effect of value added tax on profitability of small scale enterprises and the relationship between taxation policy and profitability of small scale enterprises. The study applied both qualitative and quantitative research designs where interviews and Questionnaires were used. Data was collected from both primary and secondary sources. Data was processed and analyzed using formal tables, pie charts, graphs, narrative text, and correlation to find out the relationship between taxation policies and profitability of small scale businesses. A total of 50 respondents were considered out of the entire population in the Mbarara municipality. The findings revealed that the institution used different taxation policy. These include corporation tax on the net profit of the organization, stamps duty on documents like receipts, cheques, payroll tax on employees‟ wages, gross receipts on the total gross revenue of the organization. In conclusion, therefore, Numa feeds needs to carry out an extensive survey-based analysis of small firms‟ profit margins to determine presumptive tax rates, which will not affect the small business earners. The researcher therefore, recommended that, Government should try to employ more effort on implementing tax policies that will be able to take time to explain to the small scale enterprises operators the purpose of taxing them. This will in end reduce chances of tax evasion hence increasing government revenue. True, this reason alone is not enough to address the relationship between taxation and performance on small scale enterprises. Given the short period of time in which the study was carried out, yet with limited resources. Therefore more extensive studies at a larger scope such as a survey are needed to be conducted if more reliable and far enriching information is to be obtained upon possible solutions to the problems and negative effects that can be drawn.