Effectiveness of Fiscal Incentives in FDI Promotion in Zanzibar.

Mkombe, Amour Haji (2015) Effectiveness of Fiscal Incentives in FDI Promotion in Zanzibar. Masters thesis, The Open University Of Tanzania.

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Abstract

The study aspired to investigate the effectiveness of fiscal incentives in FDI promotion in Zanzibar. It was conducted in Urban-West region Zanzibar, using a descriptive survey based on cross-sectional design. A total of 60 respondents formed the study sample taken from ZRB, TRA and ZIPA. The methods of data collection included focus group discussion, structured interview and documentary review. The instruments used in data collection were interview schedule and interview guide, while information was analysed through editing, coding, classification and tabulation. In general, the study has found that fiscal incentives such as tax holiday, corporate tax, and investment allowance played greater roles to the promotion and attraction of FDI in the study area. In the issue of the impact of FDI in the economic development in the study area, it is highly agreed that FDI significantly affected the economic development of the Isles. It provided employment opportunities, technology transfer; developed and expanded the business in the region and internationally. Zanzibar FDI also led to the improved government revenue. For example in the period of ten years till 2014, Zantel alone paid a total of Tshs. 118.3 billion to the Zanzibar government in the form of VAT, ED, SDL and PAYE. Lastly on the matter of the policy change of (FDI) toward economic development of the host country, frequent policy review and amendment, regulations and control of reasonable time limit of investment have been explained as proper policy change. The study recommended that the government should attempt to review its development and economic policies periodically to ensure attraction of appropriate FDIs and retaining of such investments in order to reduce the poverty on the isles.

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