Abstract
The main aim of this study is examining the effect of tax exemption for domestic investors on the government revenue collection in Zanzibar. Specifically, the researcher concentrated on two types of exemptions, these are; absolute and partial tax exemptions. The researcher has mainly employed quantitative research approach with appropriate method of analysis for this study. A simple random technique was used to select research respondents of 100 sample size and survey questionnaire was used as data collection instrument. To achieve a credible study a multiple regression was used to analyze the collected data from relevant respondents. The study has revealed that one predictor (partial tax exemption) had a significant effect or impact on the outcome variable (government revenue collection). However, one predictor variable that is absolute tax exemption did not show any significant result. The study concluded that tax exemption is a good instrument to stimulate and attract domestic investors when other issues have been incorporated into the procedures, alone, it cannot stand as the only factor. Finally, the study recommended as the tax incentives and exemptions work or not, there is a need for transparency, public scrutiny and dialogue, equity and bargaining are essential to building a culture of tax compliance.
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