Taxation Policies and the Growth of Medium Enterprises in Makindye Division, Kampala: A Conceptual Framework and Research Agenda

Medium enterprises sit between informal micro traders and large firms, and they are often the businesses that can add jobs and fixed assets if the conditions around them allow it. In Uganda, tax policy is one of those conditions. This article examines how taxation policies might shape the growth of medium enterprises in Makindye Division, Kampala. It draws on Uganda's Micro, Small and Medium Enterprises (MSME) policy, published descriptions of the presumptive tax, value added tax (VAT) and electronic invoicing regimes, an International Centre for Tax and Development study of compliance costs, and several earlier student studies on small businesses in Kampala. The review finds that existing evidence is thin, perception based and focused mostly on small rather than medium firms. The article proposes a framework in which three features of tax policy (the level of tax obligations, the administrative and compliance experience, and the availability of incentives and information) affect growth, measured by turnover, employment and asset expansion. It states four propositions and outlines a quantitative survey design that a later study could use. The contribution is a clearer way of studying the question, not a test of it. No new data were collected.