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Article
Publication date: 30 August 2023

Waliya Gwokyalya, Ibrahim Mike Okumu and Solomon Rukundo

This paper aims to analyse how the law on income taxation of small businesses in Uganda has evolved from the pre-colonial to the present day.

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Abstract

Purpose

This paper aims to analyse how the law on income taxation of small businesses in Uganda has evolved from the pre-colonial to the present day.

Design/methodology/approach

The study used doctrinal legal research based on existing documentation on empirical research from Ugandan laws, institutional writings, books and journal articles.

Findings

The study established that there has been various promulgations and amendment of the law on income taxation of small businesses geared at simplifying the law, expanding the tax base and improving the tax yield from this sector. However, the law still bears limitations, some of which have existed from way back before the current legal regime on presumptive tax. Thus, the income tax yield from small businesses continues to be low over the years. It posits that it is not clear whether small business owners understand the legislations on presumptive income tax to enable us to determine with certainty that further amendments have the potential of enhancing an increased tax yield, which has not been attained over the years.

Originality/value

Limited work has been undertaken on the historical development of the income taxation of small businesses in a developing country like Uganda. This study provides an initial synthesis of the literature on the evolution of income tax laws for small businesses in an economy that had been earlier neglected by scholars.

Details

International Journal of Law and Management, vol. 66 no. 1
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 17 May 2023

Waliya Gwokyalya and Ibrahim Mike Okumu

This study aims to investigate the certainty of small business (SB) taxpayers about the presumptive tax law concerning the assessment of income tax based on gross turnover and how…

474

Abstract

Purpose

This study aims to investigate the certainty of small business (SB) taxpayers about the presumptive tax law concerning the assessment of income tax based on gross turnover and how this impacts their income tax compliance.

Design/methodology/approach

The study adopted the exploratory research design. The saturation point was attained upon interviewing nine owners of SB enterprises, eight tax officers from the Uganda Revenue Authority and eight tax consultants. Themes were identified and explained using verbatim texts from the various interviews. Data were analyzed using the content analysis technique.

Findings

The findings indicate that SB taxpayers are uncertain about the nature of the presumptive tax, that it is assessed based on annual sales, indicators used to determine gross turnover and their actual tax liability. This has occasioned resistance to the tax system and inhibited voluntary compliance. SB taxpayers thus opt to wait for the tax officers to make tax assessments. However, they have used this opportunity to bribe or bargain with tax officers to pay low amounts in tax or no tax at all. Thus, policymakers and revenue authorities ought to concentrate on creating massive sensitization of the law on presumptive tax, in this case, the existing tax base on which the tax is imposed and its elements to improve income tax compliance of SBs.

Research limitations/implications

These results are relevant to policymakers and Revenue authorities in developing countries, especially in Africa, in improving income tax compliance of SBs.

Originality/value

This study examines the contribution of certainty of the income tax law on the tax base (gross turnover) on which presumptive tax is imposed to income tax compliance of SBs, which has hardly been covered in previous studies.

Details

International Journal of Law and Management, vol. 65 no. 5
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 13 February 2019

Edward Bbaale, Ibrahim Mike Okumu and Suzan Namirembe Kavuma

The purpose of this paper is to estimate both direct and indirect channels through which imported inputs spur exporting in the African manufacturing sector.

255

Abstract

Purpose

The purpose of this paper is to estimate both direct and indirect channels through which imported inputs spur exporting in the African manufacturing sector.

Design/methodology/approach

The authors estimated models for all exporters, direct exporters and indirect exporters using a probit model. The authors circumvented the endogeneity of imported inputs and productivity in the export status models by using their lagged values. The authors employed the World Bank Enterprise Survey data for a set of 26 African countries.

Findings

From the direct channel, the authors find that importers of inputs in the previous period increase the probability of exporting in the current period pointing to the possibility of sunk cost complementarities. Indirectly, high lagged firm productivity spurs exporting in the current period. Being a direct importer of inputs in the previous period increases the probability of exporting directly but has no effect on indirect exporters. Both channels are complimentary because their interaction term is positive and significant.

Practical implications

The importation of inputs seems a precondition for exporting and that any policy obscuring imports may indirectly inhibit exportation. Government policy should make importation inputs easier in order to stimulate exporting activities.

Originality/value

The paper’s contribution to empirical literature is that much of the empirical studies have overly concentrated on developed countries and hence leaving a huge knowledge gap for African countries. The only papers focusing on Africa are by Parra and Martínez-Zarzoso (2015), who focused on the Egyptian manufacturing sector, and Edwards et al. (2017), who used firm-level data from South Africa. The authors extend this literature by undertaking firm-level analysis in a cross-country setting among manufacturing firms in Africa.

Details

World Journal of Entrepreneurship, Management and Sustainable Development, vol. 15 no. 1
Type: Research Article
ISSN: 2042-5961

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Article
Publication date: 11 April 2018

Edward Bbaale and Ibrahim Mike Okumu

Corruption was ranked among the top five biggest obstacles affecting the operation of enterprises in Africa and was rated as a severe obstacle by close to 40 percent of firms in…

351

Abstract

Purpose

Corruption was ranked among the top five biggest obstacles affecting the operation of enterprises in Africa and was rated as a severe obstacle by close to 40 percent of firms in the sample. Consequently, the purpose of this paper is to investigate the relationship between corruption and firm level productivity.

Design/methodology/approach

This paper uses the Enterprise Survey Data Set of the World Bank and employs an instrumental variable (IV) approach to deal with the potential endogeneity of corruption in a productivity equation. The authors use industry-country averages of the bribe tax and time tax as well as a dummy of female ownership as IVs.

Findings

Using three different measures of corruption, the authors find evidence that corruption “sands the wheels of commerce” and hence dampens firm-level productivity even when the endogeneity of corruption is controlled for. The authors find no evidence to support the trade-off between bribe payments and the red tape suggesting that government officials deliberately use bureaucracy as a mechanism of trapping the most productive firms that can afford to pay higher bribes. Hence this study lends no support to the “greasing” hypothesis.

Practical implications

The results thus suggest that in the second best choice environment firms are still not better off paying bribes rather mitigating corruption could be ideal. Therefore alongside existing regulatory corruption mitigants in the respective African countries, the paper suggests that government through public information dissemination ought to enlighten firms that corruption is not productivity enhancing. Thus firms are better-off evading corruption tendencies than propagating them.

Originality/value

The contribution to empirical literature is that much of the empirical studies have overly concentrated on Europe and Asia and with very limited evidence available for African countries. Therefore in terms of extending the work of McAuthar and Teal (2002) and Fisman and Svensson (2007), the authors argue that by using a new data set stretching from 2006 to as recent as 2017 the paper is rightly placed to make an empirical contribution about the relationship between corruption and firm-level productivity.

Details

World Journal of Entrepreneurship, Management and Sustainable Development, vol. 14 no. 3
Type: Research Article
ISSN: 2042-5961

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