Effects Of Tax Incentives On The Performance Of Export Processing Zone (Epz) Firms In Kenya

The contemporary world is characterized with intergovernmental competition for the sole purpose of attracting multinational companies and this has made fiscal incentives to become a global phenomenon. Poor African countries rely on tax holidays and import duty exemptions, while industrial western European countries allow investment allowances or accelerated depreciation. It is for this reason that the general objective of this study is intended to establish the influence of tax incentive in Kenya on the performance of EPZ firms in Kenya. The specific objectives were to investigate the influence of corporate income tax incentive, capital allowance tax incentive, VAT incentive, excise duty tax incentive and custom duty incentive on performance on EPZ firms in Kenya. The performance of EPZ firms was measured by profitability, gross margins and the number of jobs EPZ firms created. The study adopted a descriptive and explanatory research design. The study used a stratified sampling approach because the number of the EPZ firms in Kenya was categorized into 4 strata. The total numbers of firms used in the study were 86 registered EPZ firms in Kenya according to Export Processing Zones Authority (EPZA). The study adopted a census survey design. Census survey was adopted because the population of interest was small. A sample size of all the 86 registered EPZs firms was used in this study. Primary data was obtained using questionnaires. Secondary data from the registered firms was collected on; ROA, number and value of jobs created and the length of stay of the firms. The secondary data was collected from operating EPZ firms in Kenya annual report. The study assessed the performance of EPZ firms against the tax incentives they benefited for the last ten years.