Encouraging Growth and Formalization of Small Businesses through Tax Reforms: A Study of the Tamale Metropolis in the Northern Region

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The Many countries depend on taxation to generate the required financial resources for developmental purposes. In the light of this, Governments have, over the last five years, come up with various tax reform policies aimed primarily at improving revenue mobilization and economic growth most of which have not aided in meeting revenue targets set by governments. Though governments have made attempts to encourage small businesses to formalize and grow, many of these firms continue to remain informal or though are formal, do not file tax returns. It is in this light that the study attempted to find out what might be hindering both governments and small businesses towards formalization and growth. The study specifically sought to examine small business tax reforms, the percentage that file tax returns, the challenges faced by small businesses and the revenue agencies in reforms. 92 small businesses, 9 key staff of the three GRA, and 20 other officers of GRA in the Tamale Metropolis were surveyed. It was revealed that, small businesses lacked information on reforms, 22 percent of small businesses file tax returns and some of them do not maintain proper records thus, hindering the efficient and effective operations of the GRA. It is thus recommended that Small business tax reforms should be well designed, clear enough to facilitate compliance in a way that will improve regular interactions between these businesses and the revenue agencies.
A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Commonwealth Executive Masters in Business Administration