Corporate tax incentives and Tax Revenue Collection Nexus. How much difference does Green Investment Make? Evidence from listed firms at NSE Kenya

Abstract

Purpose: Revenue collection is very important for every government in the world as it enables the government to acquire assets that are not liable to debt and that the government uses to develop its economy. However, revenue collection in Kenya has not always been as effective as it should be. This study aimed to determine the moderating effect of green investment corporation tax incentives on tax revenue collection from companies listed on the Nairobi Securities Exchange, Kenya.

Methodology: The study employed an explanatory research design and focused on the sixty-seven companies listed on the Nairobi Securities Exchange utilizing secondary data collected over five years from 2019 to 2023. The descriptive statistics and inferential statistics were analyzed using correlation and regression analysis.

Main findings: The findings revealed that corporation tax incentive has a positive and significant effect on tax revenue collection (β =0.0290453, p<0.05). The study also found that green investment moderates the relationship between corporation tax incentives and tax revenue collection (β =5.77e-06, p=0.012<0.05).

Practical Implications: In light of the study findings, the government of Kenya should consider revising and expanding tax incentives, particularly corporation tax incentives to encourage compliance and stimulate investment. Policymakers in Kenya should consider enhancing corporation tax incentives to stimulate tax revenue collection from companies listed on the Nairobi Securities Exchange. The government should incentivize ecologically workable practices and investments. This could include offering tax breaks or subsidies for firms that adopt green technologies, implement energy-efficient processes, or engage in environmentally friendly activities.