The study investigated the relationship between tax compliance and business growth among Small and Medium Sized Enterprises (SMEs) in Rubaga Division, Kampala, Uganda. The research employed a mixed-methods approach, surveying 180 SME owners/managers and conducting in-depth interviews with 12 tax officials and business leaders. Results demonstrated a significant positive correlation (r = 0.71, p < 0.01) between tax compliance levels and business growth indicators. Statistical analysis revealed that 73% of tax-compliant SMEs experienced revenue growth compared to only 28% of non-compliant enterprises. Compliant businesses showed superior performance across multiple dimensions: 65% accessed formal credit facilities versus 19% of non-compliant firms, 58% expanded their operations compared to 23%, and 61% reported improved supplier relationships versus 31%. Regression analysis indicated that tax compliance explained 51% of the variance in business growth (R² = 0.51). The study concluded that tax compliance facilitated business growth through enhanced access to financial services, improved business credibility, better government contract opportunities, reduced operational risks, and strengthened stakeholder relationships. Recommendations included simplifying tax procedures, enhancing taxpayer education, incentivizing compliance through recognition programs, strengthening enforcement mechanisms, and establishing SME-specific tax regimes that acknowledged resource constraints while promoting formalization.