Abstract

This study investigates the effects of taxes on the performance of micro-enterprises in Njinikom Sub-Division, Cameroon. Micro-enterprises play a significant role in the local economy by providing employment opportunities and contributing to income generation. However, taxation policies can either enhance or hinder their growth and profitability. The objective of this study is to assess how tax rates, compliance costs, and the overall tax burden affect the performance of micro-enterprises in this region.

A descriptive research design was used, combining both qualitative and quantitative methods. Data was collected through surveys and interviews with 10 micro-enterprise owners in Njinikom Sub-Division. The questionnaire focused on the types of taxes paid, their impact on business profitability, and the perceived fairness of the tax system. Additionally, interviews with local tax officials provided insights into the administration of taxes and their efforts to support small businesses.

The findings indicate that taxes, particularly income tax and value-added tax (VAT), significantly affect the financial performance of micro-enterprises. High tax rates and complex compliance procedures were found to be major challenges for business owners. Many respondents reported that taxes reduce their profit margins and limit their ability to reinvest in their businesses. Moreover, the cost of complying with tax regulations, including bookkeeping and hiring accountants, added to the financial burden on these enterprises.

The study also found that micro-enterprises that regularly engage with tax authorities and seek guidance on compliance tend to perform better despite the challenges posed by taxation. The lack of tax education and awareness among micro-enterprise owners emerged as a key issue affecting their ability to manage tax obligations effectively.

In conclusion, while taxes are necessary for revenue generation, their impact on micro-enterprises in Njinikom Sub-Division can be detrimental if not well managed. The study recommends that the government and tax authorities should consider simplifying tax procedures, reducing tax rates for micro-enterprises, and providing tax education programs to enhance compliance and improve business performance.

Keywords: Micro-enterprises, Taxes, Business performance, Compliance costs, Njinikom Sub-Division, Cameroon, Tax burden, Tax rates, Tax education.