Tax Reforms And Foreign Direct Investments In Kenya
Abstract
This study sought to establish the relationship between tax reforms and foreign direct
investment in Kenya. Descriptive research design was applied in the study. The
primary and secondary data was utilized. Primary data was collected via structured
questionnaire while data on foreign direct investment was collected from Ministry of
Industrialization website. Secondary data covered the period between 2014 and 2018.
The study used the both descriptive statistics and inferential statistics. Finally
analyzed data was depicted descriptively through graphs, tables, mean and standard
deviation. Inferential statistics was presented by multiple regressions. Statistical
Package for Social Science (SPSS) was used for data analysis. Also, Pearson
regression was used for showing the relationship between variables. The findings
revealed that R-Square was 0.819. This means that 81.9% of the variation in the
model used to explain FDI was as a results of the independent variables ITMS,
payment of taxes through mobile money, tax mechanisms and electronic cargo. This
also suggests that 18.1% of the variation in FDI is explained by other factors not
captured in the study and due to error terms. Further, the findings show that the model
level of significance is 0.000 which is less than the p value 0.05. Thus, the model is
statistically significant in predicting how ITMS, payment of taxes through mobile
money, tax mechanisms and electronic cargo affect FDI in Kenya. The study through
regression analysis concluded that that integrated tax management system (ITMS),
payments of taxes via mobile money, electronic cargo tracking system (ECTS) and
tax enforcement mechanisms had an effect on FDI had a positive impact on the FDI in
Kenya. However, it was also noted that all the variables influenced FDI with different
magnitudes with electronic cargo having the highest impact on FDI and ITMS having
the least influence on ITMS. Foreign direct Investment is critical in the growth of any
country’s economy. The study therefore recommends that the government should be
keen in monitoring all factors that influence FDI. This is because foreign investor
response is critically shaped by the tax provisions faced by the foreign investor in his
home country, and by the effects of tax reform on pre-tax asset return. Thus, this
informs the need for dynamism in Kenya tax system in order to fit into the changing
international economies.
Publisher
University of Nairobi
Subject
Tax ReformsRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
The following license files are associated with this item: