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The Effects of Tax Incentives on Private Domestic Investment in Addis Ababa, Ethiopia

The main purpose of this study is to assess the effects of tax incentives on private domestic investment in Addis Ababa, Ethiopia. The study has adopted a Quantitative research method in which primary data were collected from private domestic investors’ through questionnaires and also secondary data which has been collected from Ethiopian Investment Commission (EIC) and Ethiopian revenues and customs authority through document analysis. Descriptive research method was used to describe the major roles of tax incentive on private domestic investment. Hence, the finding reveals that the major role of tax incentive on private domestic investment is stimulating capital accumulation. On the other hand OLS regression method was employed to assess the respective effect of tax incentives on private domestic investment. Thus, the finding reveals that tax holiday and export duty free significantly affect the capital value of private domestic investment whereas customs duty exemption and loss carries forward were found having insignificant effect on capital value of private domestic investment. Regarding, the control variables age, occupation and infrastructure was founded to have a significant positive influence on capital value of private domestic investment. Moreover, in a bid to solve problems related with tax incentives and private domestic investment, clearly assessing and understanding costs and benefit of providing tax incentives and making it specific to private domestic investors demand as well as building transparent and accountable tax incentive administration were forwarded for both policy makers and implementers respectively.

Tax Holiday, Export Duty Free, Customs Duty Free, Loss Carries Forward

APA Style

Kassa, A. (2023). The Effects of Tax Incentives on Private Domestic Investment in Addis Ababa, Ethiopia. International Journal of Economic Behavior and Organization, 11(4), 164-173.

ACS Style

Kassa, A. The Effects of Tax Incentives on Private Domestic Investment in Addis Ababa, Ethiopia. Int. J. Econ. Behav. Organ. 2023, 11(4), 164-173. doi: 10.11648/j.ijebo.20231104.12

AMA Style

Kassa A. The Effects of Tax Incentives on Private Domestic Investment in Addis Ababa, Ethiopia. Int J Econ Behav Organ. 2023;11(4):164-173. doi: 10.11648/j.ijebo.20231104.12

Copyright © 2023 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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