| dc.description.abstract | ETR is a measure of a company's tax burden generally calculated as (current or total) income tax expense over before-tax financial accounting income. This study set to establish the relationship between firm size and effective tax rates among listed firms at Nairobi Stock Exchange. The study used a causal research design. The population included all listed companies on the Nairobi Stock Exchange by the year 2010.
A sample of 30 firms was selected divided across the five segmentations on the NSE. From the analysis, when income tax of the company declines and the turnover remains unchanged, the ETR declines. However, when income tax is held constant and the turnover of the company increases, the ETR declines. When the income tax increases proportionately with the turnover, the company's ETR is held constant but when the income tax increases more proportionately than turnover, the ETR declines.
The study recommends that companies operating in Kenya should move to comply with government stipulations especially on the location of firms so as to enjoy the tax incentives. These tax incentives like enhanced capital deductions increase the shareholders' return as tax allowable expenses are increased in favor of the investor. The study recommends that foreign companies with subsidiaries in Kenya should make a move of incorporating a local company as this will reduce its tax bracket from 37.5% to 30%. With such a reduced tax burden on the firm, the investors will reap more returns in form of reduced tax burdens. | en_US |
