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Taxation and Performance of Small Scale Businesses. a Case Study of Nakasero Market Kampala District

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Taxation and Performance of Small Scale Businesses. a Case Study of Nakasero Market Kampala District TAXATION AND PERFORMANCE OF SMALL SCALE BUSINESSES. A CASE STUDY OF NAKASERO MARKET KAMPALA DISTRICT BY NYAYOWN EMMANUEL BBA/42126/91/DF RESEARCH DISSERTATION SUBMITTED TO KAMPALA INTERNATIONAL UNIVERSITY COLLEGE OF APPLIED ECONOMICS AND MANAGEMENT SCIENCE IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION APRIL, 2012 DECLARATION I NYAYOWN EMMANUEL, declare that this research work and all presentations made herein is my original work and h as never been presented by any other person in any other University or institution for any kind of Award. Researcher NYAYOWN EMMANUEL Signature -~-~ -~ -................. Date .. :-?-: .<?. ./. ':-!. .I. .~ .<?.. \ -~ · .... .. APPROVAL This is to certify that this research proposal of NYAYOWN EMMANUEL has been carried out under the title "Taxation and performance of small scale businesses, a case study of Nakasero Market" under my supervision. It is now ready for submission to Kampala International University college of applied economics and management science and Management for the Award of a Bachelor of Business Administration degree, with my due approval Signed (Supervisor): MR. RUTEGANDA MICHEAL ~-~~-~ .... .?.-:~ \.~ -.~.\.\~.. ii DEDICATION This Research Dissertation is dedicated to my beloved parents Mr. Emmanuel Samuel and Mrs Rita Oshur. iii ACKNOWLEDGEMENT First and foremost, I give honor and glory to the Almighty Allah who gave me good health, wisdom, knowledge and hope in this study. During the preparation of this research paper, I was blessed by many people whose contributions, corrections and encouragements made the task much easier and up to its final completion. A special note of thanks goes to my beloved supervisor Mr. Ruteganda Michael whose close supervision, guidance and thoughtful insights helped me get a clear view to write this report. May God bless you abundantly. I also owe gratitude to my wonderful parent, brother and sisters as well as relatives for their constant financial and non financial support to me. I would like to express my sincere appreciation to my course mates and my closest friends Jurugo David, Maneno Jackline, Bedpiny Amum, and Daniel lual and the rest with whom I interacted most of the time during the course of my study for their contribution and guidance, the entire school of Business and Management of Kampala International University and to all my respondents. May God bless all of you richly. I'am most grateful for the support and level of cooperation I received from all small scale business traders of Nakasero Market and their customers as well. iv TABLE OF CONTENTS DECLARATION .......................................................................................... i APPROVAL .............................................................................................. ii DEDICATION .......................................................................................... iii ACKNOWLEDGEMENT ............................................................................. iv TABLE OF CONTENTS ........................................................................ 00 •••• v LIST OF TABLES .................................................................................. viii LIST OF FIGURES .................................................................................... ix ABSTRACT ............................................................................................... X CHAPTER ONE ......................................................................................... 1 INTRODUCTION ........................................................................................ ! 1.0 Introduction .............................................................................................. 1 1.1 Background of the Study ........................................................................... 1 1.2 Statement of the Problem ........................................................................... 2 1.3 Purpose of the Study ................................................................................. 3 1.4 Research Objectives ................................................................................... 3 1.4.1 General Objective ................................................................................... 3 1.4.2 Specific Objectives .................................................................................. 3 1.5 Research Questions .................................................................................. 3 1.6 Significance of the Study .......................................................................... .4 1.7 Scope of the Study ..................................................................................... 4 1.7.1 Content scope ........................................................................................ .4 1. 7 .2 Geographical scope ................................................................................ .4 1.7.3 Time Scope ............................................................................................. 4 1.8 Conceptual frame work. ............................................................................. 5 CHAPTER TWO ......................................................................................... 7 LITERATURE REVIEW .............................................................................. 7 2.0 Introduction .............................................................................................. 7 2.1 Common Concepts ................... : ................................................................ 7 2.2 Types ofTaxation ....................................................................................... 7 V 2.3 Purposes ofTaxes ...................................................................................... 8 2 .4 Importance of Small Scale Businesses ....................................................... 9 2.5 Demerits ofTaxation .................................................................................. 9 2.6 Taxation of Small Scale Businesses ......................................................... 11 2.7 Taxes on owners of Small Scale Businesses ............................................. 11 2.8 The impact of Taxation on the Small Scale Business Sector ..................... 14 2.9 Increases in Tax Duty ............................................................................... 14 CHAPTER THREE ........................................................................ , .......... 15 RESEARCH METHODOLOGY ................................................................... 15 3.0 Introduction ............................................................................................ 15 3.1 Research Design ...................................................................................... 15 3.2 Population of the study ............................................................................ 16 3.3 Sample Size ............................................................................................. 16 3.4 Sources of data ........................................................................................ 16 3.4. l Primary data ......................................................................................... 16 3.4.2 Secondary data ..................................................................................... 16 3.5 Research Instruments ............................................................................. 17 3.5.1 Questionnaires ..................................................................................... 17 3.5.2 Interviews ............................................................................................. 17 3.5.3 Observations ........................................................................................ 17 3.6 Data Analysis Method .............................................................................. 18 3.7 Data Presentation Method ....................................................................... 18 3.8 Ethical consideration ............................................................................... 18 3.9 Limitations .............................................................................................. 18 CHAPTER FOUR ..................................................................................... 20 PRESENTATION, INTBRPRETATION AND FINDINGS ................................ 20 4.0 Introduction ............................................................................................ 20 4 .1 Demographic characteristics .................................................................... 20 4.2 Relationship between tru,.ation and performance of small scale businesses ............................... : .................................................................... 24 4.3 Presentation of Other Findings ................................................................ 30 vi 4.3.1 The challenges faced by the tax authorities in collecting taxes at Nakasero market and Uganda as a whole ...................................................... 30 4.3.2 Measures taken by the tax authorities to handle these challenges ......... 32 CHAPTER FIVE....................................................................................... 34 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............................ 34 5.0 Introduction ............................................................................................ 34 5 .1 Summary ...............................................................................................
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