EXAMINATION OF TAX POLICIES TOWARDS THE INVESTMENT DECISION-MAKING IN TANZANIA

Abstract

This study examined the impact of tax policies on investment decision-making in Tanzania, focusing specifically on Moshi Municipality in the Kilimanjaro Region. The research aimed to achieve the following objectives: To assess the Value Added Tax (VAT) policy towards investment decision-making in Tanzania; to evaluate the corporate tax policy towards investment decision-making in Tanzania; and to explore the income tax policies' impact on investment decision-making in Tanzania. The study employed a qualitative research design, grounded in interpretivism philosophy, which emphasizes understanding participants' perspectives and experiences. A purposive sampling technique was used to select participants, ensuring representation from various stakeholder groups, including investors, tax officials, and financial analysts within the Moshi Municipality. Data were collected through semi-structured interviews and focus group discussions. Thematic analysis was utilized to identify key themes and insights related to the impact of tax policies on investment decisions in quantitative part the regression analysis was employed to analyze the impact of tax policies on investment decision. The findings revealed that the VAT policy significantly influences investment decisions, with investors highlighting its complexity as a barrier. Corporate tax policies were perceived as critical, with competitive rates fostering investment attraction, while high-income tax rates were associated with discouraging potential investors. The study concluded with recommendations for tax policy reforms, emphasizing the need for simplification of VAT processes, competitive corporate tax rates, and a balanced approach to income taxation. By addressing these issues, the study aims to contribute to a better understanding of tax policy dynamics and their implications for investment in Tanzania, ultimately supporting economic growth and development in the region. KEYWORDS: Value added tax, corporate tax, income tax, investment decision making, Tanzania.