The effect of tax incentives on financial performance of five-star hotels in Uganda

Abstract

The study was carried out to analyze the effect of tax incentives on financial performance of five-star hotels in Uganda. The main objective of the study was to determine the effect of tax incentives on the financial performance of five-star Hotels in Uganda. The specific objectives of the study included; to examine the different types of tax incentives in Uganda, to examine the measures of financial performance and to examine the relationship between tax incentives and financial performance. The study used both quantitative and qualitative methods of data collection which are exploratory and descriptive in nature.

The findings revealed that the findings revealed that special economic zones are very essential in ensuring performance of business, tax credits and double taxation treaties promote performance of business in a country. Findings further revealed that provision of shipping investment deductions promotes performance of businesses and still findings revealed that providing capital allowances/ deductions promotes performance of businesses. This is because capital allowances enable companies to reduce on the cost of payments and this enables them to have extra capital to invest in areas related to performance improvement The study recommended that policy makers stress the importance of tax incentives and performance of companies. From my point of view, government need to respond to each side accordingly to enable them achieve the objectives of the country and those of the shareholders. Furthermore company managers should be aware of the benefits of debt financing. So that when they want to invest on projects just need large sums of money, they fund it using loan from financial institutions so that they can take advantage of depreciation tax shield to reduce the tax liability at the end of the year.