Tax revenue constitutes a big share in governmental revenue structure. Business income tax is one of the constituent parts of it even if it is crucial for government revenue. This study aimed to investigate the influence of business income tax on the performance of small business enterprise in Bule Hora town.To identify the impact of business income tax on small business enterprise, the population wasstratified in to two major’sstratification that are business operators and tax administrative office employees. There were 1700 small business operators and the tax administrative office has 27 employees of tax authority workers. 423 samples of respondents were selected from the population size of 1727. The result of this study showed that the small business operator had a positive attitude towards the tax assessment. Besides, the study showed that except for bar and restaurant and drug store operators, in the majority of all of the other small business operators in Bule Hora town hadn’t any tax record kept by their business were such activities can make the operator for the purpose of tax evasion. Tax payers usually evade taxes not by declaring tax exact amount of profit to tax authority, such as act of escaping from passing tax liabilities by taking the advantage of loop holes in the tax evasion leads to avoidances of taxes.There is an association between operator business type and amount of tax that they paid whereas there is no association between operator business type and kind of assistance given by tax authority to small business operator at 5% level of significance.Therefore,the small business contribution to the economic development was high and the government should handle them properly.

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