The Impact of Tax Policies on Viability of SMEs: A Case of SMEs in Bindura Town

Author

Stephanie Maduveko

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

Impact of

Tax Policies

Viability

SMEs

Supervisor

N/A