ABSTRACT

This study examines the impact of taxes on the output of Small and Medium Enterprises (SMEs) in Pakistan using cross-sectional data for the fiscal year 2015-16. Through a multiple regression model employing the weighted least square technique, the relationships between various taxes (including sales tax, stamp duty, district tax, wages, and capital) and SME production are analyzed. The results indicate that sales tax has a significant negative impact on production, stamp duty has a significant negative impact on production, land tax, district tax, wages and capital has significant positive impacts on production of SMEs. These findings suggest the need for tax reforms and supportive tax policies to create an enabling environment for SMEs and stimulate their growth in Pakistan.