The Effect of Taxation on The Performance of Small and Medium Business Enterprises: The Case of Addis Ababa City Administration Kirkos Sub City Administration
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Date
2024-07-04
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AAU
Abstract
The purpose of this study was to look at how taxes affected the performance of small and
medium-sized businesses in the Kinkos sub-city administration of Addis Ababa city. In its
conceptual framework, the study used taxation as an independent variable and the
performance of SMEs as a dependent variable. To direct tThe purpose of this study was to look at how taxes affected the performance of small and
medium-sized businesses in the Kirkos sub-city administration of Addis Ababa city. In its
conceptual framework, the study used taxation as an independent variable and the
performance of SMEs as a dependent variable. To direct the investigation, three researchquestions and three hypotheses were developed. Certain factors, like tax laws, tax rates, andtax reforms, were used to evaluate taxes. A quantitative research approach was used inconjunction with an explanatory or causal descriptive research design. Cronbach's alpha
was used to evaluate the internal consistency and reliability of the questionnaire. Closedended
questionnaires
containing
24
statements
graded
on
a
five-point
Likert
scale
were
used
to
gather
data.
The
survey
included
a
sample
size
of
314
respondents,
300
of
whom
(95.5%)
responded,
and
it
was
directed
towards
a
population
of
1840
persons.
Both
descriptive
andinferential
statistics
were
used
to
interpret
the
findings.
The
performance
of
SMEs
was
foundto
have a statistically significant positive correlation with the three taxation variables (taxpolicies, tax rates, and tax changes) according to Pearson Correlation research.
Furthermore, the regression analysis revealed that all three taxes variables had a favorableand significant effect on SMEs' performance. Tax policies were identified as the mostinfluential taxing variables in predicting the success of SMEs. Tax rates and tax revisionsfollowed closely behind, with both having a major effect on SMEs' performance in their
respective order. The regression analysis results show that taxes accounts for 63.4% of the
variance in SMEs' performance within the subcity. The study's findings indicate that tax lawsand changes have not adequately addressed SMEs' pricing issues, resulting in a fall in theirsales revenue. To improve SMEs' performance, the subcity must guarantee that tax policies,rates, and reforms are consistent with their needs. he investigation, three research questions and three hypotheses were developed. Certain factors, like tax laws, tax rates, and tax reforms, were used to evaluate taxes. A quantitative research approach was used inconjunct ion with an explanatory or causal descriptive research design. Cronbach's alpha
was used to evaluate the internal consistency and reliability of the questionnaire. Closed ended
questionnaires
containing
24
statements
graded
on
a
five-point
Likert
scale
were
used
to
gather
data.
The
survey
included
a
sample
size
of
314
respondents,
300
of
whom
(95.5%)
responded,
and
it
was
directed
towards
a
population
of
1840
persons.
Both
descriptive
and inferential
statistics
were
used
to
interpret
the
findings.
The
performance
of
SMEs
was
found to
have a statistically significant positive correlation with the three taxation variables (tax policies, tax rates, and tax changes) according to Pearson Correlation research.
Furthermore, the regression analysis revealed that all three taxes variables had a favorable and significant effect on SMEs' performance. Tax policies were identified as the most influential taxing variables in predicting the success of SMEs. Tax rates and tax revisions followed closely behind, with both having a major effect on SMEs' performance in their
respective order. The regression analysis results show that taxes accounts for 63.4% of the
variance in SMEs' performance within the sub city. The study's findings indicate that tax laws and changes have not adequately addressed SMEs' pricing issues, resulting in a fall in their sales revenue. To improve SMEs' performance, the sub city must guarantee that tax policies, rates, and reforms are consistent with their needs.