Impact of Tax on Foreign Direct Investment in Tanzania

A. Kibona¹ , N.L. Kibiki²

Section:Research Paper, Product Type: Journal-Paper
Vol.7 , Issue.7 , pp.68-71, Jul-2021

Online published on Jul 31, 2021

Copyright © A. Kibona, N.L. Kibiki . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
This study examines the impact of Tax on Foreign Direct Investment in Tanzania by using time series data from 1988 to 2019. The data were collected from Central Bank of Tanzania, National Bureau of Statistics, World Bank, and IMF. The data were analyzed by using Autoregressive Distributive Lag (ARDL) technique. The results show that tax has negative and insignificant impact on foreign direct investment and the impact runs from tax to Foreign Direct Investment with no long run relationship. Insignificant impact of tax on Foreign Direct Investment might be due to infancy of FDI and policy changes in a country. Therefore, it is recommended that the government should continue to improve infrastructures that smooth investment in a country, improve and maintain stable investment environments and fiscal policy as well as ensuring prevalence of factors that attract foreign investment in a country in relation to neighboring countries which eventually will spur sustainable economic growth.

Key-Words / Index Term :
Foreign Direct Investment, Tax Revenue, ARDL, Tanzania

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