Taxation and Small and Medium Enterprises’ Growth in the Bono East Region, Ghana

Abstract

The study examined the influence of taxation on Small and Medium Enterprises’ growth in the Bono East region of Ghana. An explanatory research design was employed to quantitatively approach the conduct of this empirical study. The target population included Small and Medium Enterprises that were operating in the Bono East region. A simple random sampling technique was used to select the participants of the study and therefore structured questionnaire was issued to 400 Small and Medium Enterprises to obtain the primary data that relied on achieving the specific research objectives. The validity and reliability of the scales and the data were measured with principal component factor analysis and internal consistency respectively. Multiple regression was conducted to examine the specific research objectives. The study proved proves taxation relates positively to Small and Medium Enterprises’ growth in the Bono East Region and that taxation accounts for a substantial positive significant variance in Small and Medium Enterprises’ growth. Among the components of taxation that contribute significantly and in a positive manner to the growth of Small and Medium Enterprises include tax policy and tax administration. However, the tax system relates in an insignificant and negative manner to Small and Medium Enterprises’ growth in the Bono East Region of Ghana. The study concludes that taxation overall significantly contributes positively to the growth of Small and Medium Enterprises. It is recommended that the relevant stakeholders introduce policy reforms that prioritize creating a tax system that can predict and facilitate the development and growth of SMEs in the region.