Tax Incentives and Financial performance of Small and Medium Sized Enterprises in Kabale District, Uganda
DOI:
https://doi.org/10.47672/ije.2770Keywords:
Tax Incentives, Financial Performance, Small and Medium Sized Enterprises Investment Allowances, Tax Exemptions, UgandaAbstract
Purpose: The purpose of the study was to determine the effect of tax incentives on financial performance of SMEs in Kabale district Uganda. This study was guided by the normative theory and the political systems theory.
Materials and Methods: The study employed the descriptive research design. The data was collected using structured questionnaires. Data was later edited, coded, and fed into the SPSS computer package to generate both inferential and descriptive statistics.
Findings: The study findings as indicated by the coefficients of determination show that tax exemptions have a significant impact on growth of SMEs (β= .325, t=4.075, p<0.000). It was observed that there are various tax incentives that have been formulated to accelerate the financial performance of SMEs in Uganda although their practical implementation has not been fully realized.
Unique Contribution to Theory, Practice and Policy: The study recommends that the development of policies by Ugandan government geared to accelerate the financial performance of SMEs should have the target beneficiaries’ input before implementation to prevent the formulation of impractical and undesirable policies. The government should also provide frequent trainings to SMES on the available incentives, which they could leverage on to boost their financial performance.
Downloads
References
Ariyo (2023). Rates or revenues? On the relation between tax structures and financial performance.
Asiimwe. (2024). The Investment Effect of Taxation: Evidence from a Corporate Tax Kink, Fiscal Studies, 35 (4), 477–509.
Braunerhjelm, P. (2012). Innovation and Financial performance: A Technical or Entrepreneurial Residual, in: Innovating Firms to Economy-wide Technological Change, 286– 316, Oxford: Oxford University Press.
Chua, D. (1995). Tax incentives. Tax policy handbook, 329.
Chukwumerije, T., & Akinyomi, O. (2011). The impact of tax incentives on the performance of small-scale enterprises. Published Thesis, Redeemer’s University, Ogun State, Nigeriakuria
Cochran-Smith, M., & Lytle, S. L. (1999). Chapter 8: Relationships of knowledge and practice: Teacher learning in communities. Review of research in education, 24(1), 249-305.
Foss, N. J., & Klein, P. G. (2013). Hayek and organizational studies.
Githaiga, I. W. (2013). The impact of tax incentives on foreign direct investments inflows of firms listed at the Nairobi Securities Exchange (Doctoral dissertation, University of Nairobi).
Holban, O.I. (2007). The taxation of small and medium-sized enterprises-a hindering factor influencing the European economic financial performance. Doctoral dissertation, Alexandru Ioan Cuza University of Iasi and Academy of Economies Studies from Bucharest Romania.
International.
James, S, (2014) “Tax and non-tax incentives and investments: Evidence and Policy Implications”, Investment Climate Advisory Services. World Bank Group.
Kaplan, D. (2011). Rethinking government support for business sector R&D in South Africa.
Karingi, S. N., (2005). The tax reform experience of Uganda (No. 2005/67). WIDER Research Paper.
Kasoozi (2024). Tax Incentives, Tax Expenditures Theories in R&D: The Case of Sweden. World Tax Journal 6(2), 168- 200.
Keen, Michael & Mario Mansour (2013) “Revenue Mobilization in Sub-Saharan Africa: Challenges from Globalization II – Corporate Taxation,” Development Policy Review, 28; 573-596.
Kemigisha. (2024), Tax incentives or subsidies for business R&D?, Small Business Economics, 43 (3), 571–596.
Kothari, C. R. (2004). Research methodology: Methods and techniques. New Age
Njuguna, S. G., (2015). Taxation and private investment: evidence for Uganda. International Journal of Economics and Management Sciences, 2(11), 78-93.
Nnubia, I. C., & Obiora, F. C. (2018). Effect of tax incentives on economic financial performance in Nigeria. CARD International Journal of Social Sciences and Conflict Management, 3(2), 141-159.
OECD (2018). Tax Policy Studies, ‘Taxation of SMEs: Key Issues and Policy Considerations
Ranti, O. S., Uwaloma, A. H., & Chinenye, A. A. (2018). Effect of tax incentives on the financial performance and development of manufacturing firms in Nigeria. African Journal of Accounting and Financial Research, 3 (1), 77, 84.
Shah, A., Boadway, R. W., & Cromb, I. (1995). Fiscal Federalism: Principles and Practices. Banque Mondale, Washington, DC.
Tilahun, D. (2017). The Challenges of Tax Incentives on Government Revenue: The Case of ERCA.
Tukamuhebwa (2016). Effect of tax incentives on financial performance of Export processing Zone firms in Kenya (Dissertation, University of Nairobi).
Twesige, (2019). Effect of tax incentives on the financial performance of small and medium-sized enterprises (SMEs) in Rwanda: A case study of SMEs in Nyarugenge district. Journal of Accounting and Taxation, 11(5)
Twinomujuni (2023). & Mugenda A. (2003). Research methods: quantitative and qualitative approaches.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Roggers Collins Aheebwa, Benon Muhumuza, Noel Kiiza Kansiime, Crispus Tashobya, Vicent Byamukama, Pereez Nimusima

This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.