Abstract: To generate revenue for public initiatives, governments impose taxes on properties, individuals, and the profits of business entities. In Kenya, the manufacturing sector plays a vital role in the national economy, supplying essential services and products to larger corporations. However, recent data from the World Bank indicates a concerning trend of stagnation and declining profits among large-scale manufacturers over the past five years, primarily due to a challenging business climate. The sector's contribution to the GDP fell from 9.6 percent in 2018 to 9.2 percent in 2019, while its growth rate decreased from 3.4 percent in 2018 to 3.1 percent in 2019. These adverse developments can be linked to rising production costs, intense competition from imported products, high credit costs, drought conditions in the first quarter of 2016, and uncertainties related to the 2017 general elections. Despite these obstacles, the manufacturing sector possesses considerable, yet underutilized potential for enhancing both employment opportunities and GDP growth. Nevertheless, the sector's average growth rate has remained stagnant at approximately three to four percent over the years. Therefore, this study sought to investigate the effect of standard rate adjustment reforms on the financial performance of manufacturing companies in Nairobi City County, Kenya. This research utilized a cross-sectional methodology characterized by a descriptive survey design. The focus was on 40 manufacturing companies located in Nairobi, with the objective of surveying 600 employees from finance departments. A stratified sampling method was employed, followed by simple random sampling, which yielded a final sample of 240 participants. Primary data were gathered through questionnaires, while secondary data were sourced from the audited financial statements of the firms. A pre-test was carried out at two unrelated fast-food outlets. The questionnaires were designed to align with the research objectives, and their reliability was evaluated using Cronbach's Alpha. Descriptive statistics were applied to analyze the quantitative data, while correlation and multiple regression analyses were utilized for inferential statistics. The findings indicated that reforms related to standard rate adjustments, positively and significantly influenced the financial performance of manufacturing firms in Nairobi City County. The study concludes that modifications in corporate tax rates, value-added tax, and other levies can have a direct effect on the profitability of manufacturing enterprises. The research suggests that organizations ought to conduct regular workshops aimed at informing stakeholders, such as business owners, employees, and policymakers, regarding the consequences of rate changes.
Keywords: Value Added Tax Reforms, Standard Rate Adjustment Reforms, Financial Performance.
Title: EFFECT OF STANDARD RATE ADJUSTMENT REFORMS ON THE FINANCIAL PERFORMANCE OF MANUFACTURING COMPANIES IN NAIROBI CITY COUNTY, KENYA
Author: Ireen K. Aritho, Dr. Mathenge Theuri
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
Vol. 12, Issue 4, October 2024 - December 2024
Page No: 251-259
Research Publish Journals
Website: www.researchpublish.com
Published Date: 13-November-2024
