A Study of the Effect of COVID-19 Tax Incentives on Zambia’s Construction Sector Business Performance

Abstract

On 11 March 2020, the World Health Organization (WHO) declared COVID-19 as a global pandemic. This pandemic is having serious negative effects on global trade, domestic economies, employment, and generally, on our way of life. Therefore, many countries have had to come up with economic stimulus packages to support businesses and individuals, especially those most severely impacted by the pandemic, including Zambia. Although relief packages have been put in place in Zambia, it remains unfounded whether the measures have been effective to the extent of facilitating positive business growth, especially in the Zambian construction sector. Hence, this research will be an investigative study on the effectiveness of the relief incentives In Zambia particularly in the construction sector.  The main aim of the study was to investigate the effectiveness of the relief incentives in Zambia particularly in the construction sector. The study was anchored on the Theory of Determinants of Investment and the Neoclassical Theory. In achieving this objective, the methodology that was employed in the study involved the use of a survey using questionnaires with a sample size of 40 construction companies in Lusaka District as the respondents were interviewed using a simple random sampling method that guaranteed that the sample used was not biased. The analysis of the data involved Statistical Package for Social Sciences (SPSS) software. The study established that tax relief incentives in Zambia’s construction sector have been effective and encouraging business growth. In addition, the tax relief incentives in Zambia have a positive impact on the construction sector. The study also establishes that among the multiple options to enhance the effective progressivity of their tax systems Zambia has used the Tax waiver as the most effective one. The study recommends that the Zambian government review the coherence of its tax relief incentive programs to eliminate inconsistencies between goals, criteria, and instruments, among other recommendations.

Keywords: Tax, Tax Relief incentives, COVID-19, relief packages

DOI: 10.7176/EJBM/16-3-01

Publication date: April 30^th 2024