Description
This paper develops an empirical framework to evaluate how
corporate tax regimes influence investment diversion across
borders, reframing statutory parameters into an investment-
relevance index. Using corporate tax provisions from Kenya and
Uganda for 2024/2025, an Investment Burden Index (IBI) was
constructed from nineteen statutory parameters, including VAT,
excises, stamp duties, withholding taxes, capital gains, and loss
carry-forward. Each parameter was normalised, weighted by
investment relevance, and aggregated to yield country-level
scores, which were then linked with UNCTAD FDI inflows and
outflows for 2023. The results indicate that Uganda’s tax system
imposes a higher statutory burden (IBI –2.16) compared to Kenya
(IBI –0.33), yet Uganda attracted larger FDI inflows in 2023
(USD 1.55 billion versus USD 0.46 billion). This underscores the
mediating role of sector-specific opportunities, particularly
energy and oil, which offset statutory disadvantages. The study
contributes to debates on tax-induced diversion by showing that
while corporate taxation matters, its impact is conditional and
interacts with non-tax determinants such as natural resources and
macroeconomic stability.
Reviews
There are no reviews yet.