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Effects of Excise Duty on Financial Performance of Manufacturing Firms in Kenya: A Case of Manufacturing Firms in Kiambu County

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dc.contributor.author Mwangi, Virginia Wanjiku
dc.date.accessioned 2020-02-25T12:48:20Z
dc.date.available 2020-02-25T12:48:20Z
dc.date.issued 2019
dc.identifier.uri http://erepo.usiu.ac.ke/11732/5541
dc.description A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirements for the Degree of Masters in Business Administration (MBA) en_US
dc.description.abstract The general objective of the study was to establish the effects of excise duty on the financial performance of manufacturing firms in Kenya. The study was guided by the following specific objectives; to establish the effect of excise tax rates on the financial performance, to establish the effect of excise tax regulation on the financial performance, to establish the effect of pricing models of excisable goods on the financial performance of manufacturing firms in Kenya. The research employed descriptive research design that helped in gathering information about the existing status of the phenomena. The study population comprised of representatives from the tax departments of the 39 manufacturing firms in Kiambu County. The study adopted the use of a census where the entire population formed the sample of the study. Therefore, the sample size were representatives from each of the tax departments from the 39 manufacturing firms. The study used primary data as the method to collect data with a structured questionnaire. The research questionnaire was divided into four sections and will use a Likert Scale. The data was coded based on the Likert Scale and analyzed to test the level of significance of each variable. The study used descriptive statistics such as the percentages, mean and standard deviation to present the findings. The data was analyzed using a multiple regression model with the use of SPSS version 24 statistical analysis tool. The data from the study findings was represented in the form of tables and figures as this enhanced easier interpretation and understanding of the research findings. The result of the study showed that there was positive significant relationship between excise tax regulation and financial performance. The findings found out that coefficient of determination showed that the changes of financial performance of manufacturing firms is caused by excise tax rates, excise tax regulation, and pricing models of excisable goods. The study found out that by holding excise tax regulation and pricing models constant a unit change in excise tax rates will lead to a significant increase in profitability. Furthermore, the results also indicated that holding excise tax rates and pricing models constant a unit change in excise tax regulation will lead to increase in profitability and lastly holding excise tax rate and excise tax regulation constant a unit change in pricing models results to an increase in financial performance. The study concludes that continuous transfer of excise tax rates on consumer service decreases firm profitability. Inadequate information on tax burden transferability decreases profitability of manufacturing firms. The employees indicated that increased imposition of excise duty on luxurious products decreases the profitability and that regular issuing of excise tax incentives results to an increase in the profitability of firms. Favorable excise regulation planning environment improves profitability of firms and that redundant aggressive excise tax planning strategies by manufacturing firms increase profitability. The employees also agreed that imposition of high excise tax on large manufacturing firms positively affects profitability. Over shifting of excise taxes determines the pricing models of the various products and as excise tax keeps on changing, this also impacts the price of the products thus has a significant impact on financial performance. The study recommends that the Kenya Revenue Authority should strive to ensure that the imposition of excise tax does not affect the financial performance manufacturing firms. Government should continuously review excise tax regulation in order to enhance financial performance of manufacturing firms and the level of investment both local and foreign direct investment which will invariably reduce poverty and unemployment rates in the country. Further studies can be looked into the effects of excise duty on the profitability of the service sectors in the economy e.g. banking sector so that a clear comparison to be generalized. This will allow the revenue authority to have a clear guideline on the excise duty. en_US
dc.language.iso en en_US
dc.publisher United States International University - Africa en_US
dc.subject Excise Duty en_US
dc.subject Financial Performance en_US
dc.subject Manufacturing Firms en_US
dc.subject Kenya en_US
dc.subject Manufacturing Firms en_US
dc.subject Kiambu County en_US
dc.title Effects of Excise Duty on Financial Performance of Manufacturing Firms in Kenya: A Case of Manufacturing Firms in Kiambu County en_US
dc.type Thesis en_US


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