Abstract:
The study sought to investigate tax incentives, exclusively
tax holiday and capital deductions and how they influence
the attraction and retention of the Foreign Direct
Investments in Export Processing Zones. A sample size of
72 employees of the firms operating under EPZs was
selected for the study using stratified method for the firms
and purposive method for the respondents. The study
utilized descriptive survey design using self administered
questionnaires to solicit information from sampled senior
of Export Processing Zones firms. The study found that the
use of tax holiday greatly influences the attraction and
retention of Foreign Direct Investments. Arguably, the
manufacturing sector seems greatly favored by the tax
incentives compared to other sectors due to extended
capital allowances. The research concludes that tax
incentives should be enhanced towards boosting the
growth and expansion of the foreign director investors
and that the government should be willing to extend the
tax holiday beyond ten years for the firms depending on
capital injected on long term basis.
