Tax Administration and Financial Performance of Manufacturing Firms in Kenya: A literature Review

Dickson Njoroge Wangare

doi:10.59413/ajocs/v4.i4.2

Authors

Dickson Njoroge Wangare School of Business, TUM Author

DOI:

https://doi.org/10.59413/ajocs/v4.i4.2

Keywords:

Tax administration, Financial Performance, Tax planning, Tax compliance

Abstract

This study explores the impact of tax administration practices on the financial performance of manufacturing firms in Kenya. The manufacturing sector is crucial for economic growth and job creation, making it essential to understand how tax policies affect its performance. Tax administration encompasses procedures and policies governing tax compliance, which have evolved over time. Effective tax administration is vital for economic stability and funding public services. However, inefficient practices can hinder firm productivity and growth. Drawing on tax planning theory and agency theory, this study examines how firms strategically manage tax liabilities and navigate principal-agent relationships to optimize financial performance. The empirical review highlights findings from previous studies on the relationship between tax administration practices and firm performance in Kenya. These studies underscore the importance of tax incentives, compliance costs, and governance mechanisms in shaping firm behavior and economic outcomes. By understanding the nuances of tax administration practices, policymakers and firms can implement strategies to enhance economic stability and growth in the manufacturing sector.

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