Tax policies are normally used to stimulate investment and can be varied depending on how an economy of a country is doing. The government can thus stimulate the economy by using tax policies in place. This would in turn enable companies to make investment choices depending on how appropriate the tax policies are.
The objectives of the study were to evaluate the relationship between tax paid and level of investment by quoted companies in Kenya. In the various industry groups there had been a general increase in the amount of tax paid as well as investment. However due to the political violence in 2008, there had been a slight drop in the tax paid based mainly because of decline in profits, while also for investment the cautious approach companies took sought a stable political environment. This was further influenced by the large number of subsidiaries of multinationals which withheld their investment in the country.