4.2019

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Factors affecting tax compliance in Small and Medium Enterprises in Mombasa Central Business District
(KESRA/JKUAT - Unpublished research project, 2018) Ngeno, Sharon
Tax compliance is making payment and producing, declaration and submitting tax information to tax authority (KRA), in required format used to assess the level at which a tax payer follows, or adheres to the tax liability that he or she voluntarily or is expected by the tax laws to follow by filling return required by law and paying the taxes arising therein. The Small and medium enterprises In Kenya, forms a larger percentage of taxpayers, an approximation of 34.4% while also providing employment opportunities in the Kenyan market. This study intended on analyzing the factors affecting tax compliance by SME’s in the Mombasa County. Having three objectives: to assess the effect of the taxpayers’ attitude in Kenya on the tax compliance of SME’s in Mombasa; the effects of financial records on tax compliance, the effects of compliance cost and Taxpayers’ Psychological factors- moral values, taxpayers perception to fairness and equity in taxation- moral values, taxpayers perception to fairness and equity in taxation on tax compliance of SME’s. The research study employed three theories economic based theory, psychology theory and economic deterrence theory. A descriptive research design was adopted having a population of 200 SMEs and the sample size was 133 who are divided into three stratum. Data were collected by the use of a structured questionnaire and analyzed using inferential statistics. A regression model using statistical package for social science, the study found out that Financial Records have a strong influence on the compliance of the SMEs, the regression model obtained showed financial records affects tax compliance by 45.2%, and a strong correlation of coefficient r 0.812. The cost of compliance is strongly correlated to the Compliance given by the coefficient r 0.582, supported by the linear regression model obtained whereby; Compliance cost affects tax compliance by 34%. Taxpayers’ Psychological factors- moral values, taxpayers’ perception to fairness and equity in taxation affects tax compliance by 34.1%, a coefficient correlation of 0.808 showing a very strong correlation. The study recommends intensive tax education by KRA where real practical issues are used as illustrations on Financial Records importance, Simplification of tax compliance procedures by the authority to reduce the cost of compliance by the SMEs and Improvement in the equity and fairness in the payment of taxes through a unified and open tax system for the SMEs.
Effects of tax incentives on profitability of millers in Kenya: a case study of Unga Group Limited
(KESRA/JKUAT - Unpublished research project, 2019) Abdullahi, Kolo
Taxation rate and any existing incentives in a given country is a key determinant for economic development as any investor ought to know the viability of the investment prior to committing any resources to the endeavour. The purpose of the study was to determine the effect of tax incentives on profitability of Millers in Kenya. The study was guided by the following specific objectives; to determine the extent to which custom & excise tax incentives affects the profitability of firms, to establish the extent to which VAT incentives affects the profitability of firms and to determine the extent to which corporate income tax incentives affects the profitability of Kenyan Millers. The study utilized descriptive research design where the nature of the main data for the study was quantitative and was collected through questionnaire. The target population was Unga group limited and the sample size will be 20 respondents. Data was analyzed by use of SPSS-Version 20.0 and findings presented in the form of tables. From the findings it was revealed that custom & excise tax incentives, VAT incentives and corporate income tax incentives affected the Kenya Millers profitability significantly. Correspondingly, it was revealed that if there were no tax incentive for Kenya Millers, the firms will be operating at a loss. The finding further revealed that custom & excise tax incentives had negative effect on profitability while VAT incentives and corporate income tax incentives had positive effect on Millers profitability. The study recommends that the government should absorb the cost of electricity & fuel to the tune of the foregone duty on imports and VAT exemptions on imported raw materials in order to make the incentives of custom and excise duty as well as VAT more viable. The study further recommends that, Kenya manufacturing sector should adopt technology to improve the quality of their output to attain sustainable local and export market competitiveness and minimize dependency on government protection.
Effect of revenue automated duty system on excise tax performance in Kenya: a case of Nairobi north tax district.
(KESRA/JKUAT - Unpublished research project, 2019) Gachiku, Mary
Taxes play a major role in the development of a country. Kenya revenue authority (KRA) is mandated to collect taxes on behalf of the government of Kenya. To meet its goal, National Treasury sets target that KRA is expected to meet each year. However, over the past few years KRA experienced mixed fortunes in regards to meeting its targets.. To mitigate against this, KRA has been carrying out reforms through adoption of new systems that can improve efficiency in revenue collection, one of this system being Excisable Goods Management System (Excise duty system). Despite the adoption of these system, little emperical evidence exists on the effect of these system on tax revenue performance at KRA.This study sought to investigate the effect of Revenue automated duty system on Excisable tax performance in Kenya: a case of Nairobi North Tax District. Specifically, the study sought to determine the effect of electronic billing on Excise tax performance; establish effect of electronic monitoring system on excise tax performance and to establish the effect of E-filling on excise tax performance. The study was guided by two theories namely: theory of public expenditure, Adam Smith Canon of Taxation and optimal theory of taxation. Descriptive study design was employed in the study. The target population in this case comprised of the employees of the Kenya Revenue Authority and specifically employees in the DTD departments in Nairobi North tax district. The sample size of the study was 74 respondents. Data was collected from both primary and secondary sources.Questionnaire was used to collect primary data while secondary was collected from KRA website,journals and books that present academic research. Data was analyzed using SPSS and included both descriptive and inferential statistics. The study findings indicated that electronic billing signficantly affects excise tax performance.The study also showed that electronic monitoring system significatly affects excise tax performance. Finally, the findings revealed that electronic filling positively affects excise tax .The study results concluded that revenue automated system has an effect on excise tax performance at Nairobi north tax district. The study recommends the need for revenue authorities to automate their revenue systems to enhance excise tax performance.
The effect of taxpayer education on value added tax compliance among retailers in Kamukunji sub-county, Nairobi.
(KESRA/JKUAT - Unpublished research project, 2019) Mukanda, Joseph Evans
Notably, tax plays an important role in the growth and development of a nation. The government uses revenue collected from taxes to develop the economy and provide public services to citizens. Sadly, developing countries find it challenging to encourage their citizens to honor their tax obligations. This implies that the amount of revenue collected by governments is less than what should be collected. Kenya has emerged as one of the nations that are grappling with low tax compliance levels among taxpayers. Even though retailers (small scale and large scale) employ a significant majority of Kenya’s workforce, they exhibit the lowest levels of tax compliance. As a significant sector, the failure of retailers to honor their tax obligations denies the government much revenue that could have been used to improve public services and develop critical infrastructure. However, educating taxpayers on tax laws and processes could improve tax compliance levels. Therefore, this report investigated the effect of taxpayer education on value-added tax compliance among retailers in Kamukunji, Nairobi. The study narrowed on the effect of electronic and print media, as well as taxpayers’ literacy levels on tax compliance amidst retailers in the target location. The study applied descriptive statistics to analyze the data collected using questionnaires. This research was based on the economic deterrence theory and the theory of planned behavior. Even though the study targeted 3500 retail traders in Kamukunji, questionnaires were only distributed to 290 retailers, primarily due to time constraints. The study used SPSS version 20 to analyze the findings and develop the multiple regression model. From the study findings, it was evident that 97.2% of changes in the dependent variable were attributed to changes in the independent variables. It is thus apparent that taxpayer education is positively correlated to tax compliance among retailers in Kamukunji, Nairobi.
Effect of information technology on tax compliance by Kenya Revenue Authority in Nairobi, Kenya
(KESRA/JKUAT - Unpublished research project, 2019) Olonde, Jeconia Omondi
The Kenyan government has had budgetary shortfall to finance both its capital and recurrent expenditure. With the big projects initiated by the government, it has forced the government to borrow externally. Since tax is the largest source of revenue for the government, the Kenya Revenue Authority has a huge challenge to increase its revenue collection. One of the reason for revenue collection shortfall by Kenya Revenue Authority can be attributed to low tax compliance and therefore the tax collector has been looking at ways to increase tax compliance of taxpayers. This has led to KRA to implement information technology so as to improve tax compliance. One of the information technology implemented is iTax, and others that KRA plans to implement is big data analytics and block chain technology. With the technology aspects being implemented or being in plan of implementation, the study sought to determine the effect of information technology by Kenya Revenue Authority on tax compliance in Nairobi, Kenya, and more so, the effect of iTax on tax compliance; the effect of big data analytics on tax compliance; and the effect of block chain technology on tax compliance. With the research objectives, the study analysed the theoretical and empirical literature, with the theories used being diffusion of innovations theory, technology acceptance model, and united theory of acceptance and use of technology. The concepts around the information technology were analysed and empirical research done to analyse the outcome and was used to compare with the findings. The study formulated a conceptual framework which operationalized the variables based on the technology acceptance model. The study also identified the gaps in the empirical research and how it will fill the gaps. The study employed a descriptive survey research design to get the good description of the phenomenon under study. The target population was all the I.T staff at the Kenya Revenue Authority who are based at The Times Towers who were 65 in number. Purposive sampling technique was used to identify respondents and they were 46 so as to be adequately representative. A questionnaire was the tool for data collection and was sent to the respondents through email. The data was thereafter analysed using descriptive statistics which include means and standard deviation, and inferential statistics which was regression analysis. The study findings indicated that in general, information technology has an effect on tax compliance i.e taxpayers’ registration, filing of returns, and income declaration. The study also found that iTax system has an effect on tax compliance to a very great extent and also well accepted by users, while data analytics and block chain technology have an effect on tax compliance to a great extent and also the acceptance of the technologies are well accepted. Regression analysis indicated that iTax system and big data analytics had significant effect on tax compliance while block chain technology had no significant effect on tax compliance. The study recommended that proper training needs to be done on new information technologies and also implement change management so as they can be effective. It also recommended that the government needs to create favourable policies to enable data privacy for users.
Tax incentives and flow of foreign direct investment of manufacturing firms in Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Musyoki, Grace Mwikali
The manufacturing sector in Kenya is key to unlocking the country’s economic potential. As part of the Big Four Agenda, there are several incentives that have been initiated by the government to encourage investment in the sector. However, there has been inconclusive empirical data indicating how foreign incentives influence the quantity of foreign direct investment geared towards the manufacturing sector in Kenya. This study sought to examine this gap. The study specifically sought to examine how investment deductions, 10-year corporate income tax holiday and 10-year withholding tax influence foreign direct investment in Kenya. Optimal tax theory, the expediency theory and the theory of investment form the basis of this study. A descriptive design was adopted with the study’s population comprising 65 Kenyan-based EPZ firms. The data used in the study was obtained from the annual reports of the manufacturing firms and KNBS data for the period 2013-2018. Data analysis involved descriptive statistical techniques while inferential analysis was helpful in determining the effect of tax incentives on the flow of foreign direct investment in the manufacturing sector. The research indicated there is positive relationship between tax incentives and foreign direct investment within EPZ firms in Kenya. The findings indicated that a unit change in investment deduction will result in a .017-unit change in foreign direct investment; unit change in 10-year withholding tax will result in a .042-unit change in foreign direct and a unit change in 10-year corporate tax will result in a .032-unit change in foreign direct investment. The research recommends that the government should conduct a review of all tax incentives offered in order to foster the implementation of the corporate tax, the withholding tax and investment deductions.
Effect of tax audit on excise duty collection in Kenya: Case study of Nairobi Region
(KESRA/JKUAT - Unpublished research project, 2019) Ogutu, Michael Okinyi
This study established the effects of the tax audit on excise duty tax in Nairobi, the study was guided by the following specific objectives: to determine the effect of tax audit on excise duty collection in Kenya, to determine the effect of the field audit on excise duty collection in Kenya and to determine the effectiveness of the desk audit on excise duty collection in Kenya. Review of current literature and sources related to the influence of excise tax audit on Excise duty collection in the Nairobi region. This included theoretical reviews, the empirical literature on the focus of past studies, and critical assessment of the gaps in the literature was identified. An effective conceptual framework was also outlined and all variables were conceptualized on the basis of the study objectives. Chapter three outlines the research methodology used in this study on the effects of the tax audit on the collection of excise duties in Kenya. The research covered the following research designs, target population, sampling frameworks, sampling and sampling techniques, data collection instruments, data collection tools and procedures and data collection tools and data. Chapter four addressed the analysis and interpretation of research findings on the impact of tax audits on excise duty collection. To determine the significance level, descriptive statistics and regression analysis were used. The study was conducted over a period of 5 years in which secondary data were used in the analysis for the period 2013 to 2018.The research study used to analyze of regression. The study found that the tax audit had a positive effect on the collection of excise duty. This can be demonstrated by the different figures shown which was the collection of excise duty within 5 years. This further implied that an increase in the excise duty collection was imperative when the Kenya Revenue Authority revamps the tax audit, especially in excisable goods and services. The study revealed that there was tax audit had an effect of 71.8 percent of the collection of excise duty. The study further revealed that the study variables had a strong positive relationship.
Influence of withholding value added tax knowledge on tax compliance in Kenya: a case of Nairobi County
(KESRA/JKUAT - Unpublished research project, 2019) Waweru, Esther Wanjiru
Much of the literature has focused on withholding VAT and how its influences compliance but failed to establish the role played by VAT withholding knowledge on compliance. There is currently unresolved debate with two views on whether knowledge of withholding VAT would increase or decrease tax compliance among the tax payers. Kenya is rated among countries with low rate of tax compliance around the world. The low rate of compliance has largely been evidenced by failure of the Kenya Revenue Authority to meet revenue collection targets. The main objective of the study was to establish the influence of withholding value added tax knowledge on tax compliance in Nairobi City County. The study was guided by the following specific objectives; to explore the influence of knowledge of submission of withholding VAT returns on Tax Compliance in Nairobi County, to understand how knowledge of refund of excess credit influences Tax Compliance in Nairobi County and to underline the effect of knowledge of the penalties & interests under withholding VAT system on Tax Compliance in Nairobi County. The study adopted a descriptive research design. The population of the study comprised of 1850 VAT withholding tax agents. The study used stratified random sampling technique where 328 respondents formed the sample size. Primary data was gathered with the help of questionnaires. The collected data was entered into Statistical Package for Social Sciences for analysis. Descriptive statistics like means and standard deviations and inferential statistics like regression analysis were used in analysis. The findings were presented in form of tables and figures. The study established that knowledge of penalties and interest under withholding VAT, knowledge of refund of excess credit and knowledge of submission of withholding VAT all have postive and significant effect on tax compliance. The study concludes that withholding VAT knowledge has postive and significant effect on tax compliance. The study recommends that the Kenya Revenue Authority should put in place education programs that aim at increasing knowledge of submission of withholding VAT returns which may result into increased compliance. More SMEs should get registered for the purpose of VAT so that they gain from excess credit that is refunded by the Kenya Revenue Authority. KRA should create more awareness of the interests and penalties that may accrue to tax payers for failing to withhold VAT or pay the withheld amount.
Effect of corporate social responsibility on Kenya Revenue Authority's revenue performance
(KESRA/JKUAT - Unpublished research project, 2019) Kabera, Caleb Karagu
The 21st century corporate environment has become more conscience focused to an extent that the need for business processes that are more ethical has increased. As such, there is more attention on the ethical behaviour of corporations, or corporate social responsibility (CSR), in both the private and public sectors. It emerges that CSR has of late been viewed as an important issue in industries and economic sectors all over the world, due to the increased attention to all the dimensions of a firm‟s activities and their relationships with stakeholders. In Kenya, the issue of ethics and corporate responsibility has received significant attention in order to address the rampant cases of corruption and misappropriation of government funds by various parastatals. The essence of conducting this study was to establish the effects CSR on revenue collection performance of Kenya Revenue Authority (KRA). To fulfil this topic, the study focused on three main objectives: To determine the effects of social responsibility on Kenya Revenue Authority‟s revenue performance. To determine the effects of economic responsibility on Kenya Revenue Authority‟s revenue performance, and to determine the effects of legal responsibility against corruption on Kenya Revenue Authority‟s revenue performance. The effects of CSR on KRA include: meeting the expectations of all stakeholders especially KRA staff and the taxpayers. The geographical scope of the study was KRA Mombasa North region. The focus was on KRA staff at Forodha house in Mombasa. Stratified random sampling technique was used to select a sample of 67 staff. In this study, data was collected using a questionnaire which was administered through pick and drop method. All the data was matched and coded to maintain employees‟ confidentiality. The collected data was analysed through SPSS version 22. Descriptive statistics in the form of pie charts and contingency tables was used to describe the data. Mean and standard deviations were used to describe the variables in the study while regression analysis was conducted to determine the effects CSR on revenue collection performance of Kenya Revenue Authority (KRA). Study findings revealed that involvement in community development, employee motivation and awareness against corruption have significant effect on revenue collection performance in Kenya Revenue Authority individually with t=0.426; p=0.003, t=0.023; p=.001 and t=5.749; p=0.000 respectively and collectively with R-square value of 0.667. From the findings, the study recommended that KRA device ways to be more visible at all times by increasing its CSR activities to cover the whole month. Additionally, the study recommended that firm‟s organization, corporate managers and other key stakeholders have to invest in robust innovation and technological systems that enhances performance which plays a critical part to the economy growth and development. The study suggests further study be carried out on other factors such as organization structure and technology that might have effect on KRA‟s performance in revenue collection in Mombasa North region.
Determinants of Residential Rental Income Tax Compliance by Individual Landlords in Nairobi: Case of Dagoretti Division
(KESRA/JKUAT - Unpublished research project, 2019) Ndichu, Juliah Wachera
Past researchers have identified rental income tax compliance in Kenya to be below 50%. With the ever-growing national budget, rental income tax is seen as an area in which KRA can realize additional revenue to fill the revenue deficits. This study sought to establish the determinants of residential rental income tax compliance by individuals in Dagoretti division. The study employed descriptive research design where data was collected from a sample of 50 landlords using questionnaires. The data collected was analyzed using descriptive and inferential statistics with the help of Statistical Package for Social Sciences version 21 for evaluation of relation between dependent and independent variables. Multiple regression model was adopted. The findings of the study found a significant positive relationship between tax rate, tax knowledge, fines and penalties and cost of compliance. From the study findings it was recommended that through taxpayer’s education the taxpayers should be made to understand that filing the tax returns on a monthly does not amount to them paying higher taxes at the end of the year. Also KRA should cooperate with the ministry of education to introduce tax education in the curriculum, also there should be frequent tax education, and come up with taxpayer education programs with a wide coverage such as the media. In addition, there should be effective and timely communication of changes to the tax laws. Finally, the compliant taxpayers should see their non-compliant counterparts getting punished so that they would see that compliance is a good thing.
Factors affecting value added tax compliance among commercial building owners in Athi-river town, Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Jimmy, Rose Kanini
In Kenya tax compliance receives a lot of attention from the government and more so when it comes to Value Added Tax which is a consumption tax as high rates of noncompliance have been noted. Records at the Kenya Revenue Authority indicate that, Value Added Tax compliance from commercial buildings in Athi river feel short by about thirty percent in the financial year 2017/2018. At the national level Value Added Tax targets are rarely achieved. In realization of this situation, this study aimed at assessing the Factors Affecting Value Added Tax Compliance From Commercial Building Owners in Athi-River Town. The study had three specific objectives which were to: establish the effect of tax incentives, electronic tax systems and taxpayer education on Value Added Tax compliance from commercial building owners in Athi River Town. This study was grounded by three theories: Optimal Taxation theory, The Economic Deterrence theory and the Diffusion of Innovation theory. The study used descriptive research design and the population of this study was all the 63 commercial buildings in Athi River Town that are registered for VAT purpose. A sample of 54 respondents was picked. The study used both primary data by use of questionnaire and secondary data obtained from relevant materials which represent academic research. Data was analyzed into descriptive statistics and inferential statistics by use us SPSS (20) Data was presented on tables and charts. The finding if the study revealed that tax incentives, electronic tax systems and taxpayer education affects Value Added Tax compliance from commercial building owners in Athi River Town and the study was statistically significant. This study recommends that KRA may Zero rating some goods and supplies is a motivation taxpayer to comply with VAT regulations to promote taxpayers compliance with VAT regulations. In conclusion Tax incentives, electronic tax system and taxpayer education had positive significant effect on Value Added Tax Compliance from Commercial Building Owners in Athi-River Town. Therefore more study may be carried out by using different practices to influence Value Added Tax Compliance.
The impact of system automation on revenue collection in Kenya revenue authority, Nairobi region : a case study of Kenya Revenue Authority
(KESRA/JKUAT - Unpublished research project, 2019) Chebon, Phoebe Chemosop
Actual revenues and expected revenue always differ with large gap margin resulting in lower than expected revenue collection. While the total tax receipts may be lower compared to full compliance, it may not be lower than under other feasible taxation system. iTax is a modern computer-based assessment and collection software used by the government. It is a computing and accounting system for state revenues which stores all relevant (credit and debit) data in individual accounts in a data base, and thus helps monitor and control all tax transactions. iTax provides a convenient and efficient way to improve revenue collection, transparency in fiscal administration and management of local and national tax authorities. It is important to understand iTax system and its influence on revenue collection. The study therefore aims to establish the effect of system automation on revenue collection in Kenya Revenue Authority, Nairobi Region. The study was guided by the following specific objectives: - to investigate the effect of e-payment on revenue collection in Kenya Revenue Authority, to find out the effect of e-registration on revenue collection in Kenya Revenue Authority and to determine the effect of e-filing on revenue collection in Kenya Revenue Authority. The study adopted descriptive research design. The study target population was 320 Kenya Revenue Authority employees in Nairobi Region. The study sample size was 100. This study used primary data collected through questionnaires. A pre-test on a different sample will be carried out to give a Cronbach ‘s alpha greater than 0.7 for all the variables as a rule of thumb. Data analysis was used by use of descriptive statistics and inferential statistics using Standard statistical techniques including Pearson correlation coefficient and regression analysis was employed in the analysis. All the analysis was done using the statistical package for social sciences (SPSS Version.24). The study found that there are challenges when trying to use iTax system. The study recommends that KRA should find a way of training users on how to use the system and overcome the challenges of iTax system.
Determinants of income tax compliance among micro and small enterprises in kenya: a survey of Ngara market in Nairobi
(KESRA/JKUAT - Unpublished research project, 2019) Zau, Florence Manga
Taxes are an involuntary charge levied by the government on individual income, business profits and on transactions of goods and services. The purpose of the study was to analyze determinants of income tax compliance on MSEs. The main issue faced by tax authorities is that it has never been easy to persuade all taxpayers to comply with the regulations of the tax systems. Micro and Small enterprises are the majority of businesses in Kenya yet taxes collected from this sector are considerably low. In Kenya, the biggest block of taxpayers on the business sector are the Micro and Small Enterprises (MSEs) who according to IMF are 80 percent of taxpayers but remit only 5-10 percent of revenue. Their compliance rate is poor as most of the businesses are not registered and hence not paying taxes. This study aimed at assessing the tax compliance by MSE’s in the Ngara market of Nairobi Region. The study used a descriptive research design and owing to the large population a sample size of 150 traders was drawn from the target population of around 1500 traders. To ensure that various diverse categories of taxpayers and business entities were included in the survey, stratified sampling technique was adopted. Data was collected using structured questionnaires with both closed and open ended questions and analyzed using both descriptive and inferential statistics. The study determined that tax rate had a negative but statistically insignificant effect on the income tax compliance among MSEs in Ngara market of Nairobi Kenya. The study also established that knowledge of tax, interest and penalties, technology have a positive and statistically significant effect on income tax compliance among MSEs in Ngara market of Nairobi Kenya.
Effect of tax incentives on financial performance of manufacturing industries in Nairobi County, Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Bundi, Obed Mogesi
The primary purpose of this research was to determine the effect of tax incentives on financial performance of manufacturing industries. Tax incentives are presumed to play a significant role in attracting producers in developing nations in particular. In advanced nations, the same has been empirically proven. However, study is in its infancy phase in developing nations. This research concentrated on the effect of investment allowance, reduction of tax rated and tax exemption incentives on financial performance of manufacturing industries. The study adopted a descriptive survey research design. The study targeted all the 566 manufacturing industries operating in the Nairobi County where 85 manufacturing firms were sampled. Primary data was collected using structured questionnaires and analysed through Statistical Package for Social Sciences version 24. Descriptive and inferential statistics were used for analysis. Descriptive statistics which described the population were mean, standard deviation and percentages while inferential statistics were correlations and regression analysis. A multivariate regression model was adopted to establish the effect of tax incentives on financial performance. The results of the study showed that capital allowance incentive has a positive and significant effect on financial performance of manufacturing firms in Nairobi County (B = 0.204; t = 2.425 < 1.96; P-Value = 0.019 < 0.05) ; tax rate incentive has a positive and significant effect on financial performance of manufacturing firms in Nairobi County (B = 0.491; t = 8.298 < 1.96; P-Value = 0.000 < 0.05) and tax exemption incentive has a positive and significant effect on financial performance of manufacturing firms in Nairobi County (B = 0.772; t = 9.290 < 1.96; P-Value = 0.000 < 0.05). The study findings led to the conclusion that capital allowance incentive is important in enhancing financial performance of manufacturing firms in Nairobi and that an increase in capital allowance incentives leads to a significant increase in financial performance of manufacturing firms in Kenya. The study also concludes that tax rates incentives are important in improving financial performance of manufacturing firms in Kenya and that an increase in tax rate incentives leads to a significant increase in financial performance of manufacturing firms in Kenya. The study also concludes that tax exemption incentives play a significant role in improving financial performance of manufacturing firms in Kenya and that an increase in tax exemption incentives leads to a significant increase in financial performance of manufacturing firms in Kenya.
Factors affecting automated tax systems on revenue collection among small and medium enterprises in Kenya : a case study of west of Nairobi station
(KESRA/JKUAT - Unpublished research project, 2019) Githinji, Mary N
This study aims to establish the factors effecting automated tax systems on revenue collection in Kenya. The study was guided by the following specific objectives: - to determine the effect of tax compliance costs on revenue collection in Kenya, to analyze the effect of technical skills and knowledge on revenue collection in Kenya, to assess the effect of tax rates on revenue collection in Kenya and to determine the effect of penalties and interests on revenue collection. The study adopted a descriptive Research design. The target population of 98 was drawn from West of Nairobi Tax Station. The study used primary data collected through closed structured questionnaires to meet the objectives of the study. A pre-test on a different sample was carried out to give a Cronbach’s alpha greater than 0.7 for all the variables as a rule of thumb. Data analysis used of descriptive statistics and inferential statistics was done using Standard statistical techniques including Pearson correlation coefficient and regression analysis employed in the analysis. All the analysis was carried out using the statistical package for social sciences (SPSS Version.24). Analysis of variance (ANOVA) was used to establish if there is a statistical significance between the observed and expected values with the Pearson Chi square giving the degree significance of the relations, hence establishing the hypotheses. In multivariate analysis, multiple regression analysis model was used to determine the type of the relationship that existed between independent and dependent variables. The study found that Tax compliance cost, penalties and interest and tax rate significantly influences revenue collection. Based on study finding, this study recommends there is need for effective cost management when administering tax. Reduction in cost of compliance will increase the number of registered traders which will increase revenue collection. Kenya revenue Authority should offer on a regular basis technical support to traders which will help them familiarize with tax systems in order to facilitate collection of revenue collection. Technical support will help traders reduce the transaction time in serving their clientele and transparency in service delivery.
Factors affecting vat compliance amongst retail supermarkets in Kisumu County, Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Misuko, Sarah Kerubo
Taxation is how governments raise money to fund their expenditure and development projects. Tax revenue required is to be raised by proportionate taxes on some or all the revenues. Tax collection is among the oldest practices and recently been considered as ―one pillar of a stable nation that may also provide a basis for accountable and responsive democratic state systems. It is against this background that this study was conducted in order to determine the factors affecting VAT compliance amongst retail supermarkets in Kisumu County, Kenya. The specific objectives of this study were: To determine how taxpayer education affects VAT compliance, to determine how taxpayer perceptions affect VAT compliance, to determine how compliance costs affect VAT compliance and to determine the effects of enforcement measures on VAT compliance amongst retail supermarkets in Kisumu County, Kenya. The theories that were used in this study are economic deterrence theory, ability to pay theory and cost of service theory. The target population was Kisumu County, Kenya's eight retail stores. The study gathered primary data using semi-structured questionnaires with respect to the variables influencing VAT compliance among retail supermarkets. The data captured was coded and analysed using statistical measurements such as percentages, sums, mean and standard deviations. To analyze the collected information, ANOVA, descriptive and inferential statistics, linear regression and correlation models were used. The matrix of correlation was used to investigate the connection between the dependent variable and explanatory variables. The study established that Taxpayer Education, Taxpayer Perceptions, Compliance Costs and enforcement measures have a positive and significant effect on VAT compliance. The study recommended that KRA should empower the taxpayer education services division to enable taxpayers to be trained in order to understand their tax rights and obligations.
Factors affecting remittance of direct taxes among small and medium enterprises in Kisumu County.
(KESRA/JKUAT - Unpublished research project, 2019) Wambua, Everlyne Mwende
Business incomes are expected to be taxed in Kenya and this is guided by Section 4 of the Income Tax Act in Kenya. Taxes that can be paid on income tax include pay as you earn corporate taxes as well as withholding taxes. All these are generally seen as direct taxes. This study sought to determine factors affecting remittance of direct taxes among Small and Medium Enterprises in Kisumu County. The study was guided by the following specific objectives; to establish the effect of liquidity on remittance direct taxes among Small and Medium Enterprises in Kisumu County, to assess the effect of costs of deterrent factors on remittance of direct taxes among Small and Medium Enterprises Kisumu County and to determine the effect of cost of remittance on remittance of direct taxes among Small and Medium Enterprises in Kisumu County. The study was informed by three theories namely; ability-to-pay approach theory and Allingham and Sandmo Theory (AS theory). A cross sectional descriptive research design will be used. The study targeted 500 SMEs in Kisumu town. The study will adopt stratified random sampling technique to select 222 respondents which shall be arrived at using Yamane (1975) formula. The study collected primary using questionnaires. The analysis of the collected data was conducted using means, standard deviation and regression analysis. The findings were presented using pie charts and graphs. The study revealed that liquidity, costs of deferent factors and costs of remittance all have a significant effect and relationship with remittance of direct taxes. The study concludes that that liquidity, costs of deferent factors and costs of remittance are critical factors influencing remittance of direct taxes. The study recommends that the management of the SMEs to make decisions that enhance the level of liquidity of their firms and thus positively enhancing their ability to remit direct taxes. KRA should seal all the loopholes and establish more stringent penalties and interests for the tax payers who do not remit their direct taxes. KRA should minimize the costs that tax payers meet in remitting their direct taxes.
Effect of taxpayer education on excise duty compliance among small and medium enterprises in upper eastern region, Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Macharia, Ivan
Taxation is a major revenue source for governments world over ,therefore tax authorities must continuously put in place measures that ensure maximum revenue collection. Despite measures by KRA, Excise duty compliance has remained low and therefore KRA keeps falling short of its annual targets. The prime goal of this research is to determine the effect of taxpayer education on Excise tax compliance among small and medium entrepreneurs in Upper Eastern, Kenya. The general objective of the study was to determine the effect of taxpayer education on Excise duty compliance among entrepreneurs in Upper Eastern. The specific objectives were to determine the effect of mobile tax clinics, to determine the effect of print and electronic media advertisements and to determine the effect of tax training seminars on excise duty compliance. The study was guided by Optimal Tax Theory and Fiscal Exchange theory. This study adopted a descriptive research design .The target population was all the 23 registered entrepreneurs dealing in excisable goods and services in Upper Eastern. Primary data was used collect data using questionnaires and secondary data was obtained from the KRA offices in Embu. Regression and Correlation analysis was used to determine the significance and relationship of the variables. Both descriptive statistics and inferential statistics was carried out with the help of the SPSS software. The study adopted regression analysis to confirm the effect of taxpayer education on excise duty compliance. Data was presented in the form of frequency distribution tables & charts. The study results showed that indeed; mobile tax clinics, print electronic media adverts and tax training seminar enhances excise duty compliance on entrepreneurs in upper Eastern. Regression analysis was conducted; the findings revealed that Taxpayer education correlate with excise duty compliance. The findings revealed that the p value was 0% which is less than 5% which implies that the relationship between taxpayer education and excise duty compliance was statistically significant. The study recommends that there is need to enhance taxpayer education among entrepreneur in upper Eastern region using tax training seminars , since more tax training seminar enables them understand tax laws and hence comply with them. The study suggested future studies may be conducted on the influence of taxpayer education on excise duty Compliance among entrepreneurs other counties such as Nyeri, Mombasa and Nairobi.
Effect of tax system automation on value added tax compliance among small and medium enterprises in Kisumu County, Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Mackenzie, Irene Mwogeli
VAT compliance has remained a contingent issue among the developed and developing countries around the world. Unlike developed economies, failure to comply with taxes is more evident among developing and other emerging economies. Kenya is one of the developing. The study sought to establish the effect of tax system automation on value added tax compliance among small and medium enterprises in Kisumu County. Specifically, the study focused on electronic tax payer registration system, electronic filing and electronic payment system and their influence ion VAT compliance. The study was supported by two theories namely technology acceptance model theory and the Allingham and Sandmo (AS) theory. The design adopted in the study was descriptive. A total of 451 SMEs operating in Kisumu City were targeted. The study used stratified random sampling to sample out 221 SMEs. Primary data was collected using questionnaires. The analysis of the collected data was done using descriptive and inferential statistics. The study established that electronic tax payer registration, electronic filling and electronic payment all positively and significantly influence VAT compliance. The study concludes that tax system automation has postive and significant effect on VAT compliance. The study recommends that KRA should consider integrating the i-tax with the tax payer registration, filing and payment system so that these activities can be carried out simultaneously.
The effect of revenue collection strategies on value added tax performance: a case of domestic taxes department in east of Nairobi region, Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Mwangi, Ruth
Despite undertaking many tax reforms, KRA is yet to meet its target with regard to revenue collection. According to the KRA Sixth/Seventh Corporate plan, the authority has continually fallen short of meeting its revenue targets for the past five financial years. The general objective of the study was to establish the effect of the revenue collection strategies on value added tax performance, with a focus on domestic taxes department in East of Nairobi region, Kenya. The study particularly focused on automation, staff training and enforcement, and their effect on value added tax performance. The anchoring theories were system theory, economic deterrence theory and optimal taxation theory. The study adopted a descriptive research design with a study population of 200 managers at domestic taxes department in KRA, Nairobi East region. The target population used Fisher’s formulae to calculate the sample of 132 respondents. This research used primary data collected using structured questionnaires which were self-administered. Secondary data was obtained from journals which for academic research purposes. After quantitative data was obtained through questionnaires, it was prepared in readiness for analysis by editing, handling blank responses, coding, categorizing and was finally keyed into Statistical Package for Social Sciences (SPSS version 22) computer software for analysis. The statistics generated were descriptive and inferential, and was analyzed using correlation and multiple linear regression. The study concluded that revenue collection strategies had a significant effect on VAT performance of the domestic taxes department in Nairobi East Region, Kenya. Specifically, the study concluded that automation, staff training and enforcement had a significant effect on VAT performance under the sampled region. Furthermore, the study concluded that the effect of revenue collection strategies on value added tax performance was positive, though there may be room for further research on the subject. Based on the findings, the study made several recommendations; firstly, that the KRA should consider scaling up the adoption of automated systems as this would not only reduce the costs of operation but also increase efficiency by making operations seamless. Secondly, the study recommended that KRA should consider allocating a larger budget to staff training through the human resource department as the staff ought to keep in step with the constant reforms that are being made in the taxation system in Kenya. This would ensure that there is no gap between formulation and implementation of tax reforms. Thirdly, the study recommends that KRA should look into restructuring their surveillance system, so as to identify tax evaders, as enforcement has proved to be very vital in enhancing VAT performance.