Business Taxation and Profitability of Agrochemical Dealers in Nairobi City County, Kenya

Bernard Mwaniki Mang’ara and Lucy Wamugo Mwangi
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Bernard Mwaniki Mang’ara: School of Business, Economics and Tourism, Kenyatta University, Kenya.
Lucy Wamugo Mwangi: School of Business, Economics and Tourism, Kenyatta University, Kenya.

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Abstract: The profitability of agrochemical dealers is essential for the sustainability of Kenya's agricultural sector, a cornerstone of the national economy. However, between 2018 and 2024, leading agrochemical firms reported a decline in profit margins by approximately 8%. This study assessed the effect of business taxation on the profitability of agrochemical dealers in Nairobi City County, focusing on four tax categories: Value Added Tax (VAT), corporate tax, excise duty, and import levy. The study was guided by the theories of optimal taxation, the Laffer Curve, and profit maximization. A causal (explanatory) research design was adopted, targeting 110 registered agrochemical dealers. Data were collected through structured questionnaires, following a pilot test and reliability checks. Quantitative analysis involved descriptive statistics and inferential methods, including correlation and multiple regression. The results revealed that all tax types had a statistically significant negative impact on profitability, with VAT having the strongest effect (β = -0.483, p

Date: 2025-10-29
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Published in Asian Journal of Economics, Finance and Management , 2025, 7 (1), pp.1145-1157

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05338046

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