The effect of tax incentives on financial performance of five-star hotels in Nairobi county

Abstract

The purpose of this study was to establish the effect of tax incentives on financial performance of Five-Star hotels in Nairobi County. The study adopted the use of quantitative descriptive design. For the purpose of the research, the population constituted all the seven Five-Star hotels in Nairobi County. A census was conducted for all the seven Five-Star hotels using a questionnaire. The response rate attained was 100%. The data collected was provided by Management Accountants of the Five -Star Hotels. Data collected was analyzed using multiple regression model to establish the association between tax incentives and financial performance of the Five-Star Hotels in Nairobi County. The study revealed that there is 89.5% variation in financial performance of Five-Star Hotels due to changes in ID, IBD & W&T. The regression output found a statistically significant strong positive relationship between W&T and financial performance of Five-Star Hotels in Nairobi County. It also established a negative association between ID, IBD and financial performance of Five-Star Hotels in Nairobi County. The study therefore, recommends that the government should encourage tax incentives in the form of W&T which is beneficial to the financial performance of the Five-Star Hotel in Nairobi County. It also recommends that the government should review the policies that guide the provision of ID & IBD.