Impact of taxation on financial performance of small scale business enterprises in Ugenya Sub-County, Siaya County, Kenya

  • George Otieno Okong'o
  • Nixon Omoro
  • Christopher Ngacho


The serious decline in financial performance of small business in recent years had led to a decrease in profit available for tax obligation to the government. The need for small business enterprises to generate more returns from its internal sources has therefore become a matter of extreme urgency which has been linked with taxation of small business, especially in developing countries. Failure of small business enterprise ha grow high, approximately by 80% of the business closed down before the 5th anniversary as a result of tax related issues, coming from multiple taxations to enormous tax burdens. The study aimed to assess the impact of taxation on financial performance of small business enterprises in Ugenya Sub –county, Siaya County in Kenya. To achieve the study aims, the following specific objective was used; To evaluate the impact of level of taxation awareness and knowledge on financial performance of SSEs in Ugenya sub-county. Descriptive survey design with both qualitative and quantitative technique was used for the study. The target population was 265 SSBs in Ugenya Sub County. The study used stratified sampling techniques. Data was analyzed using descriptive statistics, correlations, and linear regressions analysis. The findings were presented in tables showing frequencies, means, percentages and graphs. The primary data was collected using questionnaire and was analyzed. The study found that business entity is aware of the consequences of failing to pay tax obligations in time. The findings found also that taxpayers take low tax rates in Kenyan tax rates in relations to financial performance. It also indicated that tax is a tool for fiscal policy employed by the government to influence the business negatively or positively depending on the nature of business activities in a country. The study also recommended that Tax awareness/knowledge, should be widened in order to increase financial performance.

Keywords: Financial Performance; Taxation; Awareness; Knowledge; Small Business, Ugenya Sub County