The Effect of Tax Incentive on the Growth of Small and Medium Enterprises in Nepal

Abstract

This study analyzes the effect of tax incentive for the growth of small and medium enterprises in Nepal. The dependent variable is growth of small and medium enterprises. Similarly, the selected independent variables are tax incentive, tax holiday, tax credit, investment allowance and loss carried forward. The primary source of data is used to assess the opinions of the respondents regarding the tax incentive, tax holiday, tax credit, investment allowance and loss carried forward for growth of small and medium enterprises. The study is based on primary data of 125 respondents. To achieve the purpose of the study, structured questionnaire is prepared. The correlation coefficients and regression models are estimated to test the different factors affecting growth of small and medium enterprises in Nepal. The result shows that tax holiday has positive impact on growth of small and medium enterprises. It means that increase in tax holiday leads to growth of small and medium enterprises. Similarly, tax incentives has positive impact on growth of small and medium enterprises. It means that increase in tax incentive leads to growth of small and medium enterprises. Likewise, tax credit has a positive impact on growth of small and medium enterprises. It shows that increase in tax credit leads to growth of small and medium enterprises. Furthermore, investment allowance has positive impact on growth of small and medium enterprises. It indicates that increase in investment allowance leads to growth of small and medium enterprises. Moreover, loss carried forward has a positive impact on growth of small and medium enterprises. It indicates that increase in loss carried forward leads to increase in growth of small and medium enterprises.