Effect of tax incentives on foreign direct investment in Kenya.

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dc.contributor.authorMukami, Angeline Irandu
dc.date.accessioned2020-02-27T11:30:25Z
dc.date.accessioned2022-06-07T06:53:01Z
dc.date.available2020-02-27T11:30:25Z
dc.date.available2022-06-07T06:53:01Z
dc.date.issued2019
dc.descriptionPROJ 338.97 IRAen_US
dc.description.abstractFDI is key to an economy as it creates employment, increases product diversity and facilitates local enterprises access to markets that are international. FDI also drives technology transfer and further helps to offer skills that are superior and techniques in management. As it enhances development in the economy, most countries strive to attract it. It is extremely significant in the world economies in terms of employment, trade and output. Tax incentives play a major role in attracting FDI inflows to countries. Various studies have shown conflicting findings regarding the effects of policies of taxation including tax incentives on FDI. This study was thus undertaken as a result of the various findings. The main objective was to identify the effect of tax incentives on FDI in Kenya. Specific objectives were: to determent effect of ID on FDI in Kenya, to establish impact of IBA on FDI in Kenya, to evaluate influence of W&TA on FDI in Kenya and to determine the impact of FWA on FDI in Kenya. The theories reviewed were: tax discrimination, eclectic paradigm, internalization and product life cycle. This study used descriptive research design. The study was undertaken on foreign direct investments in Kenya as a whole. The period of study was 2008 – 2017 and analysed in quarters. Secondary sources were used to collect data. They included Kenya Revenue Authority database and World Bank database. The relationship between the variables was ascertained by multi-variate regression analysis. Regression coefficients tested magnitude of FDI to the tax incentives: ID, IBA, WTA and FWA. Bivariate correlation analysis and ANOVA helped establish the model’s significance. Correlation coefficient (r), coefficient of determination (R2), and Adjusted (R2), were found to be 0.803 (80.3%), 0.646 (64.6%) and 0.605 (60.5%) respectively meaning that a 60.5% change of tax incentives attributed to the change in FDI while 39.5% of other factors that influenced it were not explained. The F calculated had a higher value than the critical value which showed that the model was significant in explaining the relationship that existed between the variables and FDI in Kenya. The coefficients that corresponded to ID (0.011) and FWA (0.113) were positive with FDI, while IBA coefficient was negative (-0.025) thus negative relationship with FDI. WTA also had a negative effect on FDI with a coefficient of (-0.003). The p values showed variables significance in predicting FDI. It was noted that only ID (0.003) and IBA (0.006) had a significant influence on FDI while WTA (0.418) and FWA (0.134) did not. The level of significance used was 5%. It is recommended that policy makers control the tax incentives offered as they erode the revenue to be collected by Government and offer low value to the economy.en_US
dc.identifier.urihttps://ikesra.kra.go.ke/handle/123456789/613
dc.language.isoenen_US
dc.publisherKESRA/JKUAT - Unpublished research projecten_US
dc.subjectTax Incentivesen_US
dc.subjectForeign Direct Investmenten_US
dc.subjectWear and Tear Allowanceen_US
dc.titleEffect of tax incentives on foreign direct investment in Kenya.en_US
dc.typeProjectsen_US

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