Abstract:
Small and Medium-sized Enterprises constitute the majority of business
ventures and significantly contribute to the employment and economic
liberation of both developed and developing economies. Notwithstanding the
huge contribution of SMEs to countries' economic development, they are
faced with challenges of high tax rates, unfavourable tax policies that tend to
affect their profits adversely and high tax compliance costs that accompany
the filing of tax returns to revenue authorities. The study seeks to examine the
impact of taxation on the growth of small and medium- sized enterprises in the
Central region of Ghana. A descriptive survey design was employed to study
310 SMEs within the Central region. Structured questionnaires were used to
collect data from SME respondents. The study adopted multiple linear
regression to examine the relative importance of each of the five explanatory
variables: the tax rate and complexities, tax compliance cost, tax policy, size
of business and business experience concerning the growth of SMEs. The
study found that tax compliance costs and business experience have a
significant positive relationship with the growth of SMEs. Tax rate and
complexities, and tax policy have a statistically significant negative effect on
SMEs' growth. The study recommends that the government should endeavour
to reduce the rate of tax charged businesses especially SMEs. Also, it is
recommended that tax policies targeted at the private sector should be
sensitive towards SMEs
