Tax Incentives and Financial performance of Small and Medium Sized Enterprises in Kabale District, Uganda

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.