Effects of Tax Incentives On Growth of Manufacturing Firms in Uganda at Hima Cement Limited in Kasese District

ABSTRACT

The purpose of this study was to establish the effect of tax incentives on the growth of manufacturing firms in Uganda; a case of Hima Cement Limited in Kasese. The study adopted the use of quantitative descriptive design. For the purpose of the research, the population constituted of 50 respondents of which only 38 responded. Data collected was analyzed using correlation coefficient to establish the relationship between tax incentives and growth of manufacturing firms in Uganda especially at Hima Cement. The study found a strong positive correlation or relationship between the yariables under study. The study therefore, recommends that the government should encourage tax incentives in the form of tax holydays, initial investment reduction and may others because these encourage foreign investors to do further investment hence providing jobs to the natives.

TABLE OF CONTENTS

DECLARATION .............................................................................................................................. i

APPROVAL ..................................................................................................................................... ii

DEDICATION ................................................................................................................................ iii

ACKNOWLEDGEMENT .............................................................................................................. iv

ABBREVIATIONS AND ACRONYMS ........................................................................................ v

ABSTRACT .................................................................................................................................... ix

CHAPTER ONE ............................................................................................................................ 1

INTRODUCTION .......................................................................................................................... l

1.0 Introduction ................................................................................................................................ 1

1.1 Background of the Study ............................................................................................................ 1

1.2 Research Problem ...................................................................................................................... 2

1.3 Research Objectives ................................................................................................................... 3

1.3.1 General objective .................................................................................................................... 3

1.3.2 Specific objectives .................................................................................................................. 3

1.4 Research questions ..................................................................................................................... 3

1.5 Scope of the study .............................................................. : ....................................................... 3

1.5.1 Content scope .......................................................................................................................... 3

1.5.2 Geographical scope ................................................................................................................. 4

1.5.3 Time scope .............................................................................................................................. 4

1.6 Value of the Study ...................................................................................................................... 4

CHAPTER TWO ........................................................................................................................... 6

LITERATURE REVIEW .............................................................................................................. 6

2.0 Introduction ................................................................................................................................ 6

2.1 Theoretical Framework .............................................................................................................. 6

2.1.1 Neo-classical Theory ............................................................................................................... 6

2.1.2 Agency Theory of Tax Incentive ............................................................................................ 7

2.1.3 Normative Theory ................................................................................................................... 7

2.2 Tax Incentives ............................................................................................................................ 8

2.3 Tax Incentives in Uganda .......................................................................................................... 9

2.4 Types of tax incentives to manufacturing firms in Uganda ....................................................... 9

2.5 Effects ofTax incentives to manufacturing firms .................................................................... 10

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CHAPTER THREE ..................................................................................................................... 12

RESEARCH METHODOLOGY ............................................................................................... 12

3.0 Introduction .............................................................................................................................. 12

3.1 Research Design ....................................................................................................................... 12

3.2 Study Population ...................................................................................................................... 12

3.3 Study sample ............................................................................................................................ 12

3.4 Sampling Techniques ............................................................................................................... 13

3.5 Data collection Methods .......................................................................................................... 13

3.5.1 Interview Method .................................................................................................................. 13

3.5.2 Questionnaire Method ........................................................................................................... 13

3.6 Data Collection Instruments ..................................................................................................... 14

3 .6.1 Interview Guide ............................................................... : ..................................................... 14

3.6.2 Self-Administered Questionnaire .......................................................................................... 14

3.7 Validity and Reliability of the Research Instruments ........ ~ ..................................................... 14

3.7.1 Validity .................................................................................................................................. 14

3. 7.2 Reliability .............................................................................................................................. 14

3.8 Research procedure .................................................................................................................. 15

3.9 Data Analysis ........................................................................................................................... 15

3.9.1 Analysis of quantitative Data ................................................................................................ 15

3.9.2 Analysis of qualitative data ................................................................................................... 15

3.1 0 Measurement of variables ...................................................................................................... 16

3.11 Limitations ofthe Study ......................................................................................................... 16

CHAPTER FOUR ........................................................................................................................ 17

DATA ANALYSIS, PRESENTATION AND INTERPRETATION ....................................... 17

4.0 Introduction .............................................................................................................................. 17

4.1 Response Analysis ................................................................................................................... 17

4.2 General Information ................................................................................................................. 17

4.2.1 Gender Distribution ............................................................................................................... 17

4.2.3 Age groups of respondents .................................................................................................... 18

4.2.4 Respondents by formal education level ................................................................................ 19

4.2.5 Duration Worked ................................................................................................................... 19

4.3 Types of tax incentives awarded by government to manufacturing firms in Uganda .............. 20

4.4 Effect oftax incentives on growth of manufacturing firms in Uganda .................................... 20

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4.4.4 The Relationship between tax incentives and growth of manufacturing firms in Uganda; a

case ofHima Cement Limited Uganda in Kasese district. ............................................................ 22

CHAPTER FIVE .......................................................................................................................... 24

SUMMARY, CONCLUSION AND RECOMMENDATION .................................................. 24

5.1 Introduction .............................................................................................................................. 24

5.2 Summary of Findings ............................................................................................................... 24

5.3 Conclusion ............................................................................................................................... 24

5.3.1 Effects of tax incentives on growth of manufacturing firms at Hima Cement Limited in

Kasese ............................................................................................................................................ 24

5.3.2 Types of tax incentives warded by government to manufacturing firms in Uganda ............ 24

5.4 Limitations of the study ........................................................................................................... 25

5.5 Recommendations for the Study .............................................................................................. 25

5.5 .1 Effect of tax incentives on the growth of manufacturing firms in Uganda ........................... 25

5.6 Limitations ofthe Study ........................................................................................................... 25

5.7 Areas for Further Research ...................................................................................................... 25

REFERENCES ............................................................................................................................... 26

APPENDIX 1. ................................................................................................................................. 28

QUESTIONNAIRE ....................................................................................................................... 28

APPENDIX II: Table showing the time frame for the study ......................................................... 30

APPENDIX III: An estimated budget showing expenditures of the research study ...................... 31