IMPACT OF TAXATION ON PROFITABILITY OF SMALL-SCALE BUSINESSES IN ICELAND

  • Aron Runarsson Bilek Reykjavik University
  • Birkir Bjarnasson Faustin Reykjavik University
  • Alex Sigurdsson Yusuf Reykjavik University

Abstract

Purpose of the study: The study sought to examine the impact of taxation on the profitability of small-scale businesses in Iceland.

Research methodology: The study adopted the descriptive research design. The collection of the data was done using questionnaires. The research used a sample of 120 participants to respond to the questionnaires. Descriptive and inferential were used to analyze the study. 

Findings: The study findings indicated that taxation significantly impacted the profitability of small-scale businesses in Iceland. The increases in the taxation level reduce the profitability of the businesses. 

Conclusion: The study concluded that taxes imposed on small and medium-sized businesses have various effects on their profitability development. An increase in tax rates raises production, distribution, and marketing costs, resulting in higher prices and changing customer purchasing behavior. Customers react to high prices by buying less of the product; hence the sales volumes fall, reducing the profitability of businesses. Thus, the level of taxation has an impact on the profitability level.

Recommendations: The study recommended that it is necessary to make sure that the taxation system is fair and equitable to all businesses. Tax administrators should conduct their duties with more care and integrity to combat issues such as multiple taxation and reducing small business profits. It was also suggested that the tax system should protect and promote small businesses to contribute meaningfully to economic development.

Keywords: Taxation, Profitability, Small Scale Business, Iceland

Author Biographies

Aron Runarsson Bilek, Reykjavik University

Postgraduate Student, Reykjavik University

Birkir Bjarnasson Faustin , Reykjavik University

Lecturer, Reykjavik University

Alex Sigurdsson Yusuf, Reykjavik University

Lecturer, Reykjavik University

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Published
2022-12-02
How to Cite
Bilek, A. R., Faustin , B. B., & Yusuf, A. S. (2022). IMPACT OF TAXATION ON PROFITABILITY OF SMALL-SCALE BUSINESSES IN ICELAND. African Journal of Emerging Issues, 4(13), 13 - 25. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/363
Section
Articles