Study of Tax System Impact on the Growth of Small and Medium Enterprises (SMEs): With Reference to Shinyanga Municipality, Tanzania

The tax plays important role in the growth of Small and Medium Enterprises (SMEs). In the low-income country like Tanzania, role of SMEs is critical in pushing the socio-economic development agenda of the country further. Therefore, alignment of the taxsystem to the environment specific SME growth needs can be considered an important agenda for the policy makers. Keeping this issue at focus, the study aimed to explore the managers/ executive officers’ perception of tax-system effectiveness in promoting SMEs growth in the Country. Study is based on the survey of 120 managers/ Executive officers of the selected SMEs in the Shinyanga Municipal region in Tanzania. The survey was administered using questionnaire and interview with the selected respondents. Data was analyzed by descriptive analysis method and findings were presented in terms of frequencies and percentage analysis. Findings indicate that majority of the respondents perceive the adverse impact of existing tax policies on the growth of SMEs and suggest for reforming the tax policies in the Country. The findings would help the stakeholders in designing measures to align the tax-system to SMEs in a more effective manner.