Multiple Taxation and Financial Performance of Manufacturing Firms Listed at The Nairobi Securities Exchange, Kenya
DOI:
https://doi.org/10.53819/81018102t30156Abstract
The performance of the manufacturing sector is affected by several factors, key among them being the high costs of doing business. Excessive taxation in the form of high tax rates, double, and multiple taxes are some of the challenges facing manufacturing industries. The main aim of this research was to analyze the influence of multiple taxes on the financial performance of manufacturing firms listed on the NSE. The following objectives were used to guide the study: to determine the influence of corporate tax on performance, to study the effect of excise duty on performance, to establish the effect of customs duty on performance, and to determine the moderating effect of firm size on the relationship between multiple taxes and financial performance of manufacturing firms listed on the NSE. This research adopted the agency theory, ability-to-pay theory, optimal taxation theory, and profit maximization theory. An explanatory research design was used, and the research philosophy was positivism. The study population was the 9 manufacturing firms listed on the NSE as of December 2021. Secondary data from listed manufacturing firms' annual financial reports from 2012 to 2021 was used in the study. Data was analyzed using Stata 20. Descriptive statistics like frequencies and percentages and inferential statistics like correlation and regression were generated. The dependent-independent relationship was shown using correlation coefficients. For hypothesis testing, panel regression was used. The results were presented in tables and figures with relevant interpretation and discussion. Every ethical consideration was followed. Corporate tax had no significant positive effect on financial performance (p=0.947 > 0.05). Results indicate a significant negative impact of excise duty on financial performance (p=0.000 < 0.05). The study found that customs duty significantly influenced financial performance (p=0.022 < 0.05). Firm size significantly affected the relationship between multiple taxes and financial performance, and its interaction with corporate taxes, customs duty, and excise duty affected ROE. It is recommended that managers of listed firms put proper procedures in place to enhance and increase their financial performance through corporate tax planning.
Keywords: Multiple Taxation, Financial, Performance, Manufacturing Firms, Nairobi Securities Exchange
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