The Effect of Tax Rates on Financial Performance of Small and Medium-Sized Enterprises in Busia County, Kenya

References

[1] Ahmad, N., Abdullah, N. H., Ahmad, A., & Abu, G. (2021). A literature review on how tax incentives could assist innovation and SME research ecosystem. Advanced International Journal of Business, Entrepreneurship and SME's, 3(9), 228–243.

[2] Amoako, I. O., & Gyabaah, E. N. (2020). Tax compliance among small and medium enterprises in Ghana. International Journal of Economics and Finance, 12(11), 83-92.

[3] Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.

[4] Barney, J. B. (2001). Is the resource-based "view" a useful perspective for strategic management research? Academy of Management Review, 26(1), 41–56.

[5] Bird, R. M., & Zolt, E. M. (2015). Taxation and inequality in the Americas: Changing the fiscal contract for more inclusive growth. Tulane Law Review, 89(5), 1013-1043.

[6] Devereux, M. P., & Griffith, R. (2003). Evaluating tax policy for location decisions. International Tax and Public Finance, 10(2), 107-126.

[7] Djankov, S., Ganser, T., McLiesh, C., Ramalho, R., & Shleifer, A. (2010). The effect of corporate taxes on investment and entrepreneurship. American Economic Journal: Macroeconomics, 2(3), 31-64.

[8] Kenya National Bureau of Statistics. (2020). Economic Survey 2020. Government Printer.

[9] Kipyego, D., & Kiiru, J. (2022). Effect of tax policies on financial performance of small and medium enterprises in Kenya. International Journal of Finance and Accounting, 7(3), 45-61.

[10] Mugenda, O. M., & Mugenda, A. G. (2003). Research methods: Quantitative and qualitative approaches. African Centre for Technology Studies.

[11] Muriithi, S. M. (2017). African small and medium enterprises (SMEs) contributions, challenges and solutions. European Journal of Research and Reflection in Management Sciences, 5(1), 36-48.

[12] Mwangi, P., & Otieno, S. (2024). Tax compliance costs and financial performance among manufacturing SMEs in Kenya. East African Journal of Business Management, 6(1), 78-94.

[13] Njuguna, A., & Waweru, G. (2024). Tax policy stability and SME financial management in Kenya: Evidence from Nairobi County. African Finance Journal, 12(2), 123-141.

[14] Nyamita, M. O. (2018). Assessment of factors affecting tax compliance among small and medium enterprises in Kenya: A case of Eldoret Town (Doctoral dissertation, Moi University).

[15] Wawire, N. H. W. (2017). Determinants of value added tax revenue in Kenya. Journal of Economics and Sustainable Development, 8(6), 19-26.

@article{1709896,
      author = {Sheillah Mukui, Rashid Fwamba Simiyu, Abraham A. Malenya},
      title = {The Effect of Tax Rates on Financial Performance of Small and Medium-Sized Enterprises in Busia County, Kenya},
      journal = {Iconic Research And Engineering Journals},
      year = {2025},
      volume = {9},
      number = {1},
      pages = {1167-1171},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1709896.pdf},
      abstract = {Small and Medium-Sized Enterprises (SMEs) play a crucial role in Kenya's economic development, yet they face significant challenges from taxation policies. This study examined the effect of tax rates on the financial performance of SMEs in Busia County, Kenya. Using a descriptive and correlational research design, the study collected primary data from 87 SME owners through structured questionnaires from a target population of 1,556 active SMEs. Data analysis employed descriptive statistics and simple linear regression. The findings revealed a strong positive correlation (R = 0.901) between tax rates and financial performance, with tax rates explaining 81.2% of the variance in SME financial performance (R? = 0.812). The regression coefficient (? = 0.864, p < 0.001) indicated that well-structured and predictable tax rates significantly enhance SME financial outcomes. The study concludes that transparent and stable tax rate policies create an enabling environment for SME growth. Policymakers should implement progressive tax rates that account for business size and revenue capacity to foster SME development.},
      keywords = {Tax Rates, Financial Performance, Small and Medium Enterprises, Kenya},
      month = {July},
  }