JEFMS Journal

Google Scholar

Article Pdf

---

ABSTRACT:

Taxation plays an important role in the development of every economy as well as the growth of Small and Medium Enterprises (SMEs). The purpose of the study was to evaluate the effect of turnover tax on the growth of small and medium enterprises in Lusaka and the specific objectives were; to establish the significant effect of tax incentives on SME growth in the Zambian retail sector; to find out whether the Zambian tax system espouses the basic principles of “efficiency” and “equity” in the retail clothing industry; and to assess the effect of tax policies on SMEs business profitability in the retail clothing industry.The approach adopted was mixed method. This study was based on a survey of 72 selected clothing retail stores out of the available 4433 retail businesses in Lusaka.The sampling technique applied in this research wasjudgmental sampling. The survey was administered using 72 questionnaires which had a 100% return rate. Data was analyzed through descriptive statistics, correlation and regression analysis and findings were presented in terms of frequencies and percentage analysis.The results demonstrated that tax incentives stimulate the growth of the business. It was also ascertainedthat ‘equity and fairness’ does not seriously affect the growth sort after by SMEs in the clothing retail industry.Additionally, this studyestablished that turnover tax significantly affects the profitability of SMEs in the clothing retail industry negatively. The study recommends that government should implement innovative incentives and enhancing policies that could help businesses deal and cope with uncertainties and different macroeconomic situations. It was also suggested that policy makers shouldsimplify the taxadministration systems to make it easier for taxpayers to pay taxes willingly and easily. Furthermore, the government through the relevant line agencies should provide an enabling environment and social services that support business profitability. This paper, therefore, is a strong line of policy advocacy on the imperative need for government through the Ministry of Finance and National Planning along with its line agencies to entrench tax policy incentives (not only in respect to the subject matter subsector of this study)which do not only incentivize the SMEs ecosystem but equally give growth, sustainability and profitability of these entities for the overall socio-economic development of the nation. This is the surest way of guaranteeing job creation, poverty and inequality reductions amongst the masses of Zambia, who are lamentably wallowing in the paradox of abject poverty in the land of plenty.

KEYWORDS:

Effect, Turnover Tax, Clothing Retail Industry, SMEs, Lusaka.

REFERENCES:

1) Alam, T. (2020). Canon of Taxation of Adam Smith, philosophical revelation and a short comparative discussion in the context of modern taxation structures.

2) Ameyaw, B., Korang, J. A., Twum, E. T., & Asante, I. O. (2016). Tax Policy, SMES Compliance, Perception and Growth Relationship in Ghana: An Empirical Analysis. British Journal of Economics, Management & Trade, 1-11.

3) Chambulila, L. (2015). Impact Analysis of Tax Policy and the Performance of Small and Medium Scale Enterprises in Nigerian Economy. ACADEMIA, 74-91.

4) Chisumpa, D. H., Munthali, C., Phiri, J., & Matafwali, M. (2020). Factors that influence Tax Compliance by SMEs in Zambia: A case study of Ndola Central Business Centre. Green Publication.

5) Daham, G. S., & Peltekoglu, F. B. (2012). The Effects of Zara to the SMEs of an Emerging Market. Journal of Global Fashion Marketing.

6) Freedman, J. (2003). TAXING SMALL BUSINESS Developing Good Tax Policies.

7) Futurelearn. (2022, Seotember 16). Futurelearn. Retrieved from Futurelearn: https://www.futurelearn.com/info/courses/public-financial-management/0/steps/14705

8) Kabinga, M. (2016). Principles of Taxation. Jesuit Center for Theological Reflection.

9) Kangwa, J. (2019). AN ASSESSMENT OF TAX COMPLIANCE AMONG SOWETO MARKET TRADERS IN LUSAKA. The International Journal of Multi-Disciplinary Research.

10) Khasawneh, A., Obeidat, I., & Al-Momani, A. (2008). Income tax fairness and the taxpayers’ compliance in Jordan. Journal of Economic and Administrative Sciences,, 15-39.

11) Mazwi, T., & Kasongo, R. (2020). FACTORS THAT AFFECT TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES (SMES) IN LUSAKA, ZAMBIA. International Journal of Finance and Accounting, 1-14.

12) Nuwagaba, A. (2015). Enterprises (SMEs) in Zambia. International Journal of Economics, Finance and Management.

13) Ojeka, S. A. (2011). Tax Policy and the Growth of SMEs: Implications for the Nigerian Economy. Research Journal of Finance and Accounting, 2.

14) Olalekan, S., & Oyedokun, G. E. (2019). RELEVANCE OF ADAM SMITH CANONS OF TAXATION TO THE MODERN TAX. Journal of Taxation and Economic Development.

15) PONORÎCĂ, A. G., & AL-SAEDI, A. H. (2015). THE IMPORTANCE OF TAXATION SYSTEMS FOR SME TAX COMPLIANCE. BUCHAREST.

16) Sattari, f. (2012). Do Government financial and tax affect SME Growth. Academia; Accelerating the world's research., 1-7.

17) Tee, E., Boadi, L. A., & Opoku, R. T. (2016). The Effect of Tax Payment on the Performance of SMEs: The case study of selected SMEs in Ga West Municipal Assembly. European Journal of Business and Management.

18) Twesige, D., & Gasheja, F. (2019). Effect of tax incentives on the growth of small and medium-sized enterprises (SMEs) in Rwanda. Journal of Accounting and Taxation.

19) Werekoh, E. A. (2022). The Effects of Taxation on Economic Development:. Research Square.

20) Yambani, A., & Kabinga, M. (n.d.). 2016.

21) ZRA. (2022, September 15). ZRA. Retrieved from ZRA: https://www.zra.org.zm/tax-information/