The Buea Municipality, as a focal point of economic activity in the Southwest Region of Cameroon, hosts a vibrant Small and Medium-sized Enterprises (SMEs) sector crucial for local economic development. However, the growth of these SMEs faces a multifaceted challenge emanating from the impact of taxation. The complex tax landscape, characterized by a combination of corporate income tax, value-added tax (VAT), and various levies imposed at different administrative levels, poses a significant financial burden on SMEs. This intricate tax structure often leads to an overwhelming tax compliance process, diverting valuable resources away from core business activities and hindering the potential for growth. Despite the acknowledged importance of SMEs in driving economic development, there is a paucity of comprehensive studies that specifically address the nuanced impact of taxation on their growth within the unique context of the Buea Municipality.

Furthermore, the administrative complexities associated with tax compliance, especially for SMEs lacking dedicated financial and legal departments, act as a formidable barrier to growth. The bureaucratic hurdles in navigating tax-related procedures create an additional burden for SMEs, potentially stifling their expansion and competitiveness in the marketplace. The challenge is exacerbated when considering the informal sector, where many SMEs in Buea operate, facing distinct challenges such as limited access to formal financial services and a higher propensity for tax evasion.

Additionally, while tax incentives and exemptions are intended to stimulate growth for SMEs, their effectiveness in the specific context of Buea remains uncertain. The lack of clarity on how SMEs perceive, access, and utilize these incentives hampers the development of targeted policies that could genuinely support their growth objectives. Identifying the key issues surrounding taxation and SME growth in the Buea Municipality is essential for policymakers and stakeholders to formulate informed interventions that balance revenue generation for the government with creating an enabling environment for the sustainable development of SMEs. Thus, this research seeks to address the overarching problem: understanding the intricate dynamics of taxation and its impact on the growth trajectory of SMEs in the Buea Municipality.

Research Questions:

1. To what extent does the multiplicity of taxes, including corporate income tax, value-added tax (VAT), and other levies, influence the financial burden on Small and Medium-sized Enterprises (SMEs) in the Buea Municipality?

2. How do the administrative complexities associated with tax compliance impact the resource allocation and core business activities of SMEs operating in the Buea Municipality?

3. What are the perceptions of SMEs in Buea regarding the effectiveness of tax incentives and exemptions in stimulating growth, and how do these perceptions influence their utilization of such incentives?

4. In what ways does the informal sector, a prevalent operational space for SMEs in Buea, contribute to challenges related to taxation, including limited access to formal financial services and potential tax evasion?

Objectives:

1. To analyze the impact of the multiplicity of taxes, including corporate income tax, value-added tax (VAT), and other levies, on the financial burden experienced by SMEs in the Buea Municipality.

2. To assess how administrative complexities associated with tax compliance affect resource allocation and core business activities for SMEs operating in the Buea Municipality.

3. To investigate the perceptions of SMEs in Buea regarding the effectiveness of tax incentives and exemptions in stimulating growth and to determine how these perceptions influence the utilization of such incentives.

4. To explore the specific challenges faced by SMEs operating in the informal sector in Buea concerning taxation, including limited access to formal financial services and potential tax evasion.

Hypotheses:

1. Null Hypothesis (H₀): There is no significant relationship between the multiplicity of taxes and the financial burden experienced by SMEs in the Buea Municipality. Alternate Hypothesis (H₁): The multiplicity of taxes significantly influences the financial burden experienced by SMEs in the Buea Municipality.

2. Null Hypothesis (H₀): Administrative complexities associated with tax compliance do not significantly impact resource allocation and core business activities for SMEs in the Buea Municipality. Alternate Hypothesis (H₁): Administrative complexities associated with tax compliance significantly impact resource allocation and core business activities for SMEs in the Buea Municipality.

3. Null Hypothesis (H₀): There is no significant correlation between the perceptions of SMEs regarding the effectiveness of tax incentives and the actual utilization of these incentives in Buea. Alternate Hypothesis (H₁): The perceptions of SMEs regarding the effectiveness of tax incentives significantly influence the utilization of these incentives in Buea.

4. Null Hypothesis (H₀): Operating in the informal sector does not significantly contribute to challenges related to taxation, including limited access to formal financial services and potential tax evasion, for SMEs in Buea. Alternate Hypothesis (H₁): Operating in the informal sector significantly contributes to challenges related to taxation, including limited access to formal financial services and potential tax evasion, for SMEs in Buea.