THE EFFECT OF TAXATION ON SMALL AND MEDIUM SIZE ENTERPRISES

ABSTRACT

The study is titled the effect of taxation on the performance of SMEs in Buea municipality, and has as objectives to determine the extent to which taxation affect SMEs in Buea, to examine the various types of taxes paid by SMEs in Buea, and to examine the challenges faced by small and medium size enterprises in paying taxes. Taxes play an important role in the growth of small and medium enterprises (SMEs). In the low-income countries like Cameroon, the role of SMEs is critical in pushing the socioeconomic development agenda of the country forward. Therefore, alignment of the tax system to the environment specific SME growth needs can be considered an important agenda for the political, economic and financial policy makers. This study applied both qualitative and quantitative research designs where questionnaires were used. Data was collected using primary sources were a structured questionnaire was designed considering a sample size of 30 SMEs. Data was processed and analyzed using frequency tables and regression analysis, to find out the relationship between taxes and performance of small and medium enterprises and the results show that taxation significantly affects the performance of SMEs. Thus, the study recommended that tax administration should reduce criminal aspects of tax evasion with well-known tax measures. Further, tax administration should use current tax reform to reduce tax complexity with Tax authorities should focus and help taxpayer during filing taxes returns in formation. However, tax authority provides greater assistance to tax payers; It should create favorable conditions for tax compliance not only tax awareness.

Keywords: Taxation, Performance, and Small and Medium Size enterprises.