IDEAS home Printed from https://ideas.repec.org/a/spr/joiaen/v11y2022i1d10.1186_s13731-022-00194-8.html
   My bibliography  Save this article

The effect of tax incentives practices on the sustainability of micro, small and medium enterprises in Ethiopia during the outbreak of corona virus pandemic

Author

Listed:
  • Kanbiro Orkaido Deyganto

    (Dilla University)

Abstract

Purpose This study was aimed to identify the effect of tax incentive practices on the sustainability of MSMEs during an outbreak of coronavirus pandemic in Ethiopia. Design/methodology/approach To achieve this objective, the researcher has employed a quantitative research approach with an explanatory research design in which six hypotheses have been tested. The primary data were collected from 300 MSMEs owners/operators using structured questionnaires. A multiple regression model was employed to study the effect of tax incentives parameters on the sustainability of MSMEs. Findings According to the regression analysis, this paper revealed that tax holiday, tax allowance, reduction in the tax rate, accelerated depreciation, loss carry forward, and tax exemption have a positive and statistically significant effect on the sustainability of the MSMEs. Research limitations The current study was geographically focused on Ethiopia by considering the MSMEs sector. The subject wise was focused on the effect of the tax incentives on the sustainability of MSMEs. The primary data were limited to the year 2020. It might be improved in the future if other researchers incorporate large firms in the country and use secondary data for the analysis of multiple years. Also, future researchers will improve the same study by considering both monetary and non-monetary incentives as study variables. Practical implications To survive during the COVID-19 pandemic, MSMEs need support from the government in the form of tax incentives. The tax incentives play a great role in enhancing the growth and the sustainability of MSMEs as well as the economy as a whole. So the owners of MSMEs have to ask the government to obtain necessary support in the form of monetary and non-monetary incentives to be sustainable in economic activity. Also, the findings and recommendations of the current study might serve as an ingredient and be informative to the policymakers on the MSMEs sector. The governments have to continue to shape tax incentives policies to support the MSMEs’ sustainability by providing tax and non-tax incentives. Originality/value This study contributes to empirical evidence about the effect of tax incentives practices on the sustainability of MSMEs during the outbreak of COVID-19 in Ethiopia by considering six tax incentive practices in terms of tax holiday, tax allowance, reduction in the tax rate, accelerated depreciation, loss carried forward, and tax exemption.

Suggested Citation

  • Kanbiro Orkaido Deyganto, 2022. "The effect of tax incentives practices on the sustainability of micro, small and medium enterprises in Ethiopia during the outbreak of corona virus pandemic," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-22, December.
    • Handle: RePEc:spr:joiaen:v:11:y:2022:i:1:d:10.1186_s13731-022-00194-8
    DOI: 10.1186/s13731-022-00194-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s13731-022-00194-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1186/s13731-022-00194-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Endalew Terefe Alene, 2020. "Determinants that influence the performance of women entrepreneurs in micro and small enterprises in Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-20, December.
    2. Boso, Nathaniel & Danso, Albert & Leonidou, Constantinos & Uddin, Moshfique & Adeola, Ogechi & Hultman, Magnus, 2017. "Does financial resource slack drive sustainability expenditure in developing economy small and medium-sized enterprises?," Journal of Business Research, Elsevier, vol. 80(C), pages 247-256.
    3. Abriham Ebabu Engidaw, 2021. "The effect of external factors on industry performance: the case of Lalibela City micro and small enterprises, Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-14, December.
    4. Johan Jansson & Jonas Nilsson & Frida Modig & Gabriella Hed Vall, 2017. "Commitment to Sustainability in Small and Medium‐Sized Enterprises: The Influence of Strategic Orientations and Management Values," Business Strategy and the Environment, Wiley Blackwell, vol. 26(1), pages 69-83, January.
    5. Seife Ayele, 2006. "The industry and location impacts of investment incentives on SMEs start-up in Ethiopia," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(1), pages 1-13.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marvello Yang & Norizan Jaafar & Abdullah Al Mamun & Anas A. Salameh & Noorshella Che Nawi, 2022. "Modelling the significance of strategic orientation for competitive advantage and economic sustainability: the use of hybrid SEM–neural network analysis," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-28, December.
    2. Khadiza Begum, 2024. "Contribution of Tax Induced Foreign Direct Investment for Sustainable Development in Bangladesh," International Journal of Science and Business, IJSAB International, vol. 34(1), pages 76-91.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adelaide Martins & Manuel Castelo Branco & Pedro Novo Melo & Carolina Machado, 2022. "Sustainability in Small and Medium-Sized Enterprises: A Systematic Literature Review and Future Research Agenda," Sustainability, MDPI, vol. 14(11), pages 1-26, May.
    2. Andrew Mzembe, 2021. "The psychological distance and construal level perspectives of sustainable value creation in SMEs," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(2), pages 465-478, March.
    3. Ebrahim Endris & Andualem Kassegn, 2023. "Profitability of Agricultural Micro and Small-Scale Enterprise in North Wollo Zone, Amhara Regional State, Ethiopia," SAGE Open, , vol. 13(2), pages 21582440231, May.
    4. Jinshan Zhang & Man Liu, 2024. "How to Leverage Digital Sustainability Orientation to Promote Environmentally Sustainable Practices of Manufacturing Enterprises in China," Sustainability, MDPI, vol. 16(12), pages 1-20, June.
    5. Hazem Ali & Ting Chen & Yunhong Hao, 2021. "Sustainable Manufacturing Practices, Competitive Capabilities, and Sustainable Performance: Moderating Role of Environmental Regulations," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    6. Al-Shaer, Habiba & Uyar, Ali & Kuzey, Cemil & Karaman, Abdullah S., 2023. "Do shareholders punish or reward excessive CSR engagement? Moderating effect of cash flow and firm growth," International Review of Financial Analysis, Elsevier, vol. 88(C).
    7. Samuel Godadaw Ayinaddis, 2023. "Socio-economic factors affecting women’s entrepreneurial performance in MSEs in Bahir Dar City, Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-21, December.
    8. João M. Lopes & Sofia Gomes & Rosselyn Pacheco & Elizabete Monteiro & Carolina Santos, 2022. "Drivers of Sustainable Innovation Strategies for Increased Competition among Companies," Sustainability, MDPI, vol. 14(9), pages 1-18, May.
    9. Fatoki Olawale, 2018. "Environmental Sustainability Practices of Immigrant-Owned Small and Medium Enterprises in South Africa," European Review of Applied Sociology, Sciendo, vol. 11(17), pages 27-43, December.
    10. Obey Dzomonda & Olawale Fatoki, 2020. "Environmental Sustainability Commitment and Financial Performance of Firms Listed on the Johannesburg Stock Exchange (JSE)," IJERPH, MDPI, vol. 17(20), pages 1-21, October.
    11. Yongan Zhang & Umair Khan & Seoyeon Lee & Madiha Salik, 2019. "The Influence of Management Innovation and Technological Innovation on Organization Performance. A Mediating Role of Sustainability," Sustainability, MDPI, vol. 11(2), pages 1-21, January.
    12. Yusheng Kong & Fahad Javed & Jahanzaib Sultan & Muhammad Shehzad Hanif & Noheed Khan, 2022. "EMA Implementation and Corporate Environmental Firm Performance: A Comparison of Institutional Pressures and Environmental Uncertainty," Sustainability, MDPI, vol. 14(9), pages 1-25, May.
    13. Sukhjeet Kaur Matharu & Divya Juneja, 2023. "The Influence of Perceived Motivational Factors on Success of Women-Driven Ventures and Their Contribution in Economic Development," Vision, , vol. 27(5), pages 616-627, November.
    14. Sergio Ochoa Jiménez & Alma Rocío García García & Beatriz Alicia Leyva Osuna & Sacnicté Valdez del Río, 2021. "Entrepreneurial Behavior of SMEs and Characteristics of the Managers of Northwest Mexico," Social Sciences, MDPI, vol. 10(1), pages 1-15, January.
    15. Sungur Onur, 2019. "Spatial Distribution of Investment Incentives and the Impact of New Incentive System for Less Developed Regions in Turkey," Review of Economic Perspectives, Sciendo, vol. 19(1), pages 25-48, March.
    16. Guo, Feng & Zou, Bo & Zhang, Xiaofei & Bo, Qingwen & Li, Kai, 2020. "Financial slack and firm performance of SMMEs in China: Moderating effects of government subsidies and market-supporting institutions," International Journal of Production Economics, Elsevier, vol. 223(C).
    17. Desislava Tsvetkova & Emma Bengtsson & Susanne Durst, 2020. "Maintaining Sustainable Practices in SMEs: Insights from Sweden," Sustainability, MDPI, vol. 12(24), pages 1-26, December.
    18. Chrisovalantis Malesios & Antonis Skouloudis & Prasanta Kumar Dey & Fouad Ben Abdelaziz & Apostolos Kantartzis & Konstantinos Evangelinos, 2018. "Impact of small‐ and medium‐sized enterprises sustainability practices and performance on economic growth from a managerial perspective: Modeling considerations and empirical analysis results," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 960-972, November.
    19. Samuel Adomako & Nguyen Phong Nguyen, 2020. "Human resource slack, sustainable innovation, and environmental performance of small and medium‐sized enterprises in sub‐Saharan Africa," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 2984-2994, December.
    20. Jeffrey Muldoon & Younggeun Lee & Eric W. Liguori & Saumyaranjan Sahoo & Satish Kumar, 2024. "Mapping the entrepreneurship ecosystem scholarship: current state and future directions," International Entrepreneurship and Management Journal, Springer, vol. 20(4), pages 3035-3080, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joiaen:v:11:y:2022:i:1:d:10.1186_s13731-022-00194-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.