The moderating effect of green investment on the Relationship between tax incentives and tax revenue Collection from companies listed on the Nairobi Securities exchange, Kenya.

Abstract

For any government in the globe, revenue collection is crucial because it allows it to purchase assets that are debt-free and that it can employ to grow its economy. However, because of things like global climate change and environmental sustainability, revenue collection in Kenya hasn't always been as successful as it should be. Green investments have therefore become a pivotal avenue to address these global concerns. In developing countries, the government has intervened through fiscal policies such as tax incentives, particularly amidst economic pressures and overall volatility in macro and microeconomic conditions. This study's main goal was to ascertain how green investment affected the relationship between tax incentives and tax revenue collection from Kenyan companies listed on the Nairobi Securities Exchange. Finding out how corporation tax incentives affect tax revenue collection from companies listed on the Nairobi Securities Exchange, Kenya; how value-added tax incentives affect tax revenue collection from companies listed on the Nairobi Securities Exchange, Kenya; how customs incentives affect tax revenue collection from companies listed on the Nairobi Securities Exchange, Kenya; and figuring out how green investment influences the relationship between corporation tax incentives, value-added tax incentives, customs tax incentives, and tax revenue collection from companies listed on the Nairobi Securities Exchange, Kenya have been the specific goals of the study. The triple bottom line theory served as the study's main theoretical framework. This study, which used an explanatory research approach, examined secondary data gathered over a five-year period from 2019 to 2023 to focus on the sixty-seven businesses listed on the Nairobi Securities Exchange. The Capital Markets Authority's standards for listed firms include the publication of sustainability reports and audited financial reports, which is how the study acquired its data. Correlation and multiple regression analysis were used to analyze the descriptive and inferential statistics. Corporation tax incentive has a positive and significant effect on tax revenue collection with β1 = 0.0226592 (p = 0.043 < 0.05). VAT incentives have a positive and significant effect on tax revenue collection with β2 = 0.0093434 (p = 0.011 < 0.05). Customs duty incentives have a positive and significant effect on tax revenue collection with β3 = 0.0000221 (p = 0.000 < 0.05). The study found that green investment moderates the relationship between: Corporation tax incentive and tax revenue collection, with a coefficient of β5 = 0.0000123 (p = 0.010 < 0.05). VAT incentives and tax revenue collection, with a coefficient of β6 = 0.00000881 (p = 0.000 < 0.05). Customs duty incentives and tax revenue collection, with a coefficient of β7 = 0.00000476 (p = 0.004 < 0.05). Recommendations in view of the study's conclusions that tax incentives have a positive impact on tax revenue collections, the Kenyan government ought to think about updating and growing its tax incentives program, especially the ones related to corporation tax, VAT, and customs duty, in order to promote compliance and boost investment. Government incentives for environmentally sound behaviors and investments should be strengthened in light of the moderating influence of green investment on the relationship between tax incentives and tax revenue collection. This can entail providing tax exemptions or other financial incentives to businesses who use eco-friendly products, energy-saving procedures, or recycle their waste. Research recommendations included conducting a study to look into how tax reforms have affected Kenya's ability to collect taxes. One possible course of action would be to carry out research on how digitizing tax systems affects tax revenue collecting.