Effect of Multiple Taxation on Financial Performance of Hotels and Camps in Maasai Mara National Reserve, Kenya.
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Date
2024
Authors
Journal Title
Journal ISSN
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Publisher
Daystar University, School of Business and Economics
Abstract
This study examined the effect of multiple taxation on the financial performance of hotels and camps in Maasai Mara National Reserve, Kenya. It aimed at determining the effect of VAT, PAYE and Tourism Levies on the financial performance of hotels and camps located within and around Maasai Masai Mara National Reserve (MMNR). The complex and multifaced relationship between multiple taxation and financial performance is crucial for justifiable tax strategies and financial optimization. It focused on three main objectives: examining the impact of Value Added Tax (VAT), Corporate Taxes, and the Tourism Levy on the financial performance of selected hotels and camps; analyzing trends in financial performance in terms of profitability and revenue growth; and exploring the relationship between multiple taxation and financial performance in hotels and camps within the MMNR. The study was grounded in theories such as the Ability-to-Pay Theory, Classical Taxation Theory, Political Power Theory, and the Modigliani-Miller (M&M) Theory. A descriptive research method was employed, targeting a population of 47 hotels and camps across nine conservancies. A sample size of 118 respondents from these establishments was selected through simple random sampling. Questionnaires, consisting of both open and closed questions, served as the primary data collection tool. Qualitative data was analyzed using SPSS version 26, with relationships assessed through frequencies and percentages. The study reveals that multiple taxes; VAT, tourism levies, and corporate taxes place significant financial strains on these businesses. A majority of respondents reported the negative impacts of VAT (85.9%), tourism levies (87%), and corporate taxes (90.6%) on financial performance. However, government interventions, such as tax exemptions, positively impacted financial performance, with 95.3% of respondents acknowledging increased revenue from exemptions. The regression model indicates that VAT, Corporate Tax, and Tourism Levy significantly affect profitability (R = 0.764, Adjusted R² = 0.759), with VAT, Corporate Tax and Tourism Levy being key factors, as reflected by their unstandardized coefficients (-0.400, -0.600 & -0.320) and significance levels (p < 0.01). VAT is significantly having negative correlation with Financial Performance (r = -.372, p < .01), suggesting that increase in VAT leads to decline in financial performance. Tourism has a negative relationship with financial performance as shown that (r = -.314, p < .01). This implies that tourism levy has a negative relationship with finance leading to decline in profitability. On corporate tax has the highest mean (M = 21.09) and a standard deviation of 6.34, reflecting the considerable impact of this tax on the businesses studied. Its negative correlation with financial performance (r = -.275, p < .01). The findings demonstrate a negative relationship between VAT, corporate tax and tourism levy and the financial performance of the hotels and camps. The study recommends a downward review of the existing taxes levied on these firms to eliminate multiple taxation and enhance their financial profitability and productivity.
Description
MASTER OF BUSINESS ADMINISTRATION in Finance
Keywords
Multiple taxation, Financial performance, VAT, PAYE and Tourism Levies
Citation
Jemeli, G. (2024). Effect of Multiple Taxation on Financial Performance of Hotels and Camps in Maasai Mara National Reserve, Kenya. Daystar University, School of Business and Economics.