Abstract:
The study assessed the implication of withholding tax deductions on working capital
management towards contractor's profitability in government funded project in Tanzania. The
study was guided with three specific objectives that generated research questions that were
used towards facilitating knowledge generation process. The objectives include examining the
practices of withholding taxes deduction and its implication towards working capital in
government funded projects in Tanzania; to determine effect of withholding taxes on working
capital towards profitability of government funded projects in Tanzania; and to identify the
challenges of withholding taxes on profitability of government funded projects in Tanzania. Exploratory design was used in facilitating knowledge generation process through testing of
the subjective reality using research questions guided the study. The study was conducted in
Jandu Plumbers Limited as the case of the inquiry with primary data being used to assure
information gathering from the employees sample size. The facts for the study were generated
from the sample of 53 participants using questionnaires and interviews. The collected results
through questionnaires were computed in SPSS software version 23 which fostered the
gathering of descriptive statistics to present the results. Facts that were collected using
interviews were analyzed using content analyses which were narratively presented with
themes to support the results. Findings revealed that with the practices withholding taxes
deductions are higher in government funded projects than others. Also, with effects the taxes
have had negative effects with implication on profitability defects and performance concerns in
the projects as the outcomes or results. Furthermore, withholding taxes deductions has been
the source of challenges in the working capital on the conduct of government funded projects
with implication on profitability and performance. The implication of the results is that
withholding taxes deductions constitute defects on the working capital with regard to the
government funded projects which has implication on the performance of the projects as well
contractor profitability.
