The Impact of tax policies on viability of SMEs: a case of SMEs in Bindura town

Author

Maduveko, Stephanie

Title

The Impact of tax policies on viability of SMEs: a case of SMEs in Bindura town

Abstract

Small and medium-sized enterprises (SMEs) play a crucial role in driving economic growth, employment creation, and innovation. In the European Union (EU), there has been a growing recognition of the need to create a tax environment that is conducive to SME growth. The main
objective was to investigation he impact of tax policies on viability of SMEs in Bindura. This research employed a descriptive research design and stratified random sampling technique with a sample size of 186 SMEs. This research used a quantitative data analysis techniques, using SPSS software. The study found that import Duties have the highest perceived impact on SME viability and financial performance (mean score: 4.19). This could be due to factors like industry type and reliance on imported goods. Income Tax (4.05) and Corporate Tax (4.13) also have relatively high perceived impact, suggesting a significant burden on SMEs. There is a somewhat positive perception of current tax policy fairness and transparency (mean score: 4.15), but there's also variation in opinions (standard deviation: .667). This could be due to a lack of understanding of tax regulations. The effectiveness of existing tax incentives for new SMEs has mixed reviews v (mean score: 3.97). While some SMEs find them helpful, others perceive them as inadequate or
poorly targeted (standard deviation: 1.139). SMEs strongly believe lower tax burdens would be beneficial (mean score: 4.55). There is some variation in opinion (standard deviation: .617), but the sentiment leans positive. Offering tax breaks for reinvesting profits is viewed favorably by SMEs (mean score: 4.17). However, there is more variation in opinions compared to reduced tax rates (standard deviation: .839). These findings suggest that policymakers should consider a multi-pronged approach to tax reform for SMEs. Reducing tax burdens, particularly import duties, income tax, and corporate tax, could be a significant positive step. Additionally, policymakers should explore offering tax breaks that incentivize reinvestment for growth.

Date

June 2024

Publisher

BUSE

Keywords

SMEs

Tax policies

Viability

Supervisor

N/A