The study investigated the effect of taxation awareness on the financial performance of small-scale enterprises (SSEs) in Kanungu District, Uganda. A cross-sectional survey design was employed with a sample size of 160 respondents selected through stratified random sampling. Data were collected using structured questionnaires and analyzed using descriptive statistics and Pearson correlation analysis. Results revealed that taxation awareness had a significant positive relationship with financial performance (r = 0.687, p < 0.01). Specifically, 68.8% of respondents demonstrated moderate taxation awareness, while 73.1% reported moderate financial performance levels. The study concluded that enhanced taxation awareness significantly improved compliance rates, record-keeping practices, and ultimately financial sustainability among SSEs. Recommendations included implementing targeted tax education programs, simplifying tax regulations, and establishing support mechanisms for SSEs to enhance their understanding of tax obligations and benefits.