The Influence of Tax Policy on the Growth and Profitability of Small and Medium-Sized Enterprises in Kasoa
DOI:
https://doi.org/10.61424/y3trm767Keywords:
Tax policy, SMEs, Business expansion, Profitability, IncentivesAbstract
This study examined the influence of tax policy on the growth and profitability of Small and Medium-Sized Enterprises (SMEs) in Kasoa, Ghana. The study sought to determine how existing tax policies affect the performance of SMEs, particularly in terms of business expansion and profitability. A descriptive research design employing a quantitative approach was adopted. The target population comprised 102 registered and active SMEs operating in Kasoa, from which a purposive sample of 50 enterprises was selected. Primary data were collected using structured questionnaires and analyzed using the Statistical Package for the Social Sciences (SPSS) Version 27. Descriptive statistics, correlation analysis, and regression analysis were employed to examine the relationship between tax policy and SME growth and profitability. The findings revealed that supportive and well-implemented tax policies have a significant positive influence on both the growth and profitability of SMEs. Specifically, tax policies that provide incentives, simplify tax procedures, and create a predictable tax environment enhance business expansion, improve profitability, and strengthen the financial sustainability of SMEs. Conversely, restrictive or poorly implemented tax policies were found to hinder business performance by increasing operational challenges and limiting growth opportunities. Based on these findings, the study recommends that policymakers formulate and implement SME-friendly tax policies that promote business growth while ensuring tax compliance. The government should expand tax incentive programs, simplify tax regulations, and strengthen stakeholder engagement during tax policy formulation to create a more supportive business environment. The study further recommends periodic reviews of tax policies to ensure they remain responsive to the changing needs of SMEs. Future research should examine the long-term effects of tax policy reforms on SME sustainability, compare the effectiveness of different tax policy frameworks across regions, and investigate the interaction between tax policy and other business support mechanisms in enhancing SME performance.
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