The Role of Government Regulatory and Tax Policies in Shaping SME Performance in the UAE

Abstract

Government-related challenges continue to be a major obstacle to the sustainability and growth of small and medium-sized enterprises (SMEs), particularly in emerging economies such as the United Arab Emirates. This study aimed to examine the impact of government challenges on SME performance by investigating the effects of government regulation challenges and tax policy challenges. A quantitative research approach was adopted using data collected from 658 owners, shareholders, chief executive officers, directors, and senior managers of SMEs operating in the UAE. The proposed research model was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SmartPLS to assess both the measurement and structural models and test the proposed hypotheses. The findings revealed that government regulation challenges and tax policy challenges have significant negative effects on SME performance. The results highlight the importance of establishing a supportive regulatory and taxation environment to enhance SME competitiveness and long-term sustainability. This study contributes to the growing body of literature on SME performance by providing empirical evidence on the influence of government-related challenges within the UAE context.