1.2022

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Factors Affecting Value Added Tax Performance of Medium Enterprises in Nyeri County, Kenya
(KESRA/JKUAT, 2022) Maingi, Benedetta
The focus of the inquiry was on establishing the factors that affect VAT performance among SMEs in Nyeri. Th specific objectives of the inquiry revolved around enforcement measures, technological factors and deterrent factors all in relation to value added tax performance of medium enterprises in Nyeri County, Kenya. The study was guided by the, economic deterrence theory and ability to pay theory. This study adopted a descriptive survey design targeting 350 medium sized firms in Nyeri town and its environ. Stratified random sampling was adopted to select 183 respondents. Primary data was collected through questionnaire that was piloted tested beforehand. The analysis of the collected data was done through descriptive and inferential statistics. The findings were that a unit improvement in enforcement measures, technological factors and deterrent factors would increase VAT performance among medium enterprises in Nyeri County by 0.368 units, 0.124 units as well as 0.149 units respectively. The study conclude that enforcement measures, technological factors and deterrent factors are significant predictors when it comes to VAT issued. It was recommended that the information and communication technology managers should enhance and reconfigure the existing technological platforms like i-tax so that they are more user-friendly. More deterrent measures should be put in place to deter taxpayers from evading taxe
Determinants of Residential Monthly Rental Income Tax Compliance among Landlords in Masii Town in Machakos County, Kenya
(2022) Kasiva, Elizabeth
In Kenya, tax compliance is still low despite the use of adverse measures such as; penalties, armed monitoring, routine audits and fines. This has been attributed to the fact that there is still deemed to be a lack of proper mechanisms to impose tax collection and ease of tax calculation for all tax payers. The study aimed to determine factors that influence residential monthly rental income tax compliance among landlords in Masii Town in Machakos County. The study was guided by three research objectives: To examine the effect technology on residential monthly rental income tax compliance among landlords in Masii Town in Machakos County; To establish the effect of tax payers knowledge on residential monthly rental income tax compliance among landlords in Masii Town in Machakos County; To determine the effect of compliance costs on residential monthly rental income tax compliance among landlords in Masii Town in Machakos County. The study was guided by three theories namely: Economic Deterrence Theory, Diffusion of Innovation (DOI) Theory and Fiscal Exchange theory. The target population was 255 respondents and Sample size of 155 respondents with response rate of 85%. Data was collected from a primary source.A Questionnaire was used to collect the primary data while Data analyzed included both descriptive and inferential statistics. The study findings indicated that technology, taxpayer knowledge and compliance cost signficantly affects residential monthly rental income tax compliance with p value of 0.001, 0.002 and 0.000 respectively which is less than 0.05. The model summary showed that a unit change in technology increases residential rental income tax compliance by 0.316,a unit change in taxpayer knowledge increases residential rental income tax compliance by 0.239 and a unit change in cost of compliance decreases residential rental income tax compliance by -0.383.Finally, the summary of the findings reveal that technology and taxpayer knowledge positively affects residential monthly rental income tax compliance while compliance costs negatively affect residential monthly rental income tax compliance.The study results reveal that the use of I-tax has saved respondents time while filing taxes and taxpayers find filling returns online on a monthly basis to be an easy process due to internet access .Technology is used to increase tax administration efficiency, increase taxpayer services and boost tax compliance. Findings on knowledge showed that having knowledge and understanding of tax regulation helps taxpayers know the importance of declaring their taxes, dates of making payment, where and how to make tax payment. Cost remains a challenge as taxpayers incur cost such as; getting and organizing information, record keeping, employing tax experts, buying stationaries and materials that will be used during filing and time spent calculating and filing taxes. Based on the findings, the study recommends that KRA, the government and tax practitioners should formulate policies that emphasize leverage on technology to enhance collection of tax revenue. Furthermore, cost reduction mechanisms should also be adopted to enable taxpayers to comply at minimum costs. Therefore, future studies should be carried out to examine the effect of stakeholder sensitization on residential monthly rental income tax compliance
Factors Affecting Residential Rental Income Tax Compliance by Landlords in Machakos County, Kenya
(2022) Kinyua, Caroline
The study sought to investigate factors affecting residential rental income tax compliance among landlords in Machakos County in Kenya. The study specifically sought to find out whether knowledge of the tax system and tax laws influences compliance on rental income tax compliance among landlords in Machakos County, investigate the effect of penalties and interests on rental income tax compliance among landlords in Machakos County, ascertain the effect of tax rates of the revenue authority on rental income tax compliance among landlords in Machakos County and establish whether modes of payment influence rental income tax compliance among landlords in Machakos County. This study adopted a descriptive survey design. The target population of this study was all landlords in Machakos County while the accessible population were those landlords residing within the County. Simple random sampling and convenience sampling was used to identify individual respondents. Primary data was collected using questionnaires. The collected data was consequently analyzed quantitatively using Statistical Package for Social Scientist software and the findings of the research presented using tables. From the findings of the multiple regression analysis, the study established when all other factors are held constant, a unit increase in Taxpayers Tax knowledge would lead to a 0.259 increase in Residential Rental Income Tax Compliance in Machakos County (β1= 0.259, p=0.000<0.05). It was also established that a unit increase in Fines penalties and interests would lead to a 0.152 increase in Residential Rental Income Tax Compliance in Machakos County when other factors are held constant β1= 0.152, p=0.000<0.05). On Tax Rates, the study established that an increase in Tax Rates would lead to a 0.112 decrease in Residential Rental Income Tax Compliance in Machakos County (β1=- 0.112, p=0.012<0.05). Last but least, the study established that unit increase in Modes of payment would lead to a 0.313 increase in Residential Rental Income Tax Compliance in Machakos County (β1= 0.313, p=0.000<0.05). The study thus concluded that taxpayer’s tax knowledge, tax rates, fines penalties and interests and modes of payment affect residential rental income tax compliance among landlords in Machakos County in Kenya. The study recommended that there should be more training through public participation by Kenya Revenue Authority to all taxpayer in the matters to do with residential tax compliance, tax knowledge i.e. registration, how to file returns, generating payment slips, modes of payment, the importance of filing returns, the related fines, penalties and interests in cases of noncompliance among other aspects to enhance the levels of tax compliance by landlords in Machakos county and the county as a whole. The study suggested that there is need for more research to be done based on the same topic but in different regions within the boundaries of Kenya.
Factors Affecting Value Added Tax Compliance on Small and Medium Enterprises in Embakasi East Constituency, Nairobi City Count
(Elaine Wairimu Kaniaru, 2022) Kaniaru, Elaine
The current study sought to establish the factors affecting value added tax compliance on small and medium enterprises in Embakasi East Constituency, Nairobi City County. It was guided by the following specific objectives: - to determine the effect of enforcement measures on value added tax compliance among small and medium enterprises in Embakasi East Constituency, Nairobi City County; to establish the effect of taxpayers’ sensitization on value added tax compliance among small and medium enterprises in Embakasi East Constituency, Nairobi City County; and to establish relation between tax invoice management system and value added tax compliance among small and medium enterprises in Embakasi East Constituency, Nairobi City County. Three theories namely: economic deterrence theory, diffusion of innovation and theory of planned behavior formed the theoretical framework of this study. Descriptive research design was employed. The target population was 2846 micro and small enterprises licensed in Embakasi East Constituency Nairobi City County. A sample of 351 Micro and Small Enterprises-determined using Yamane’s formula-was selected using stratified random sampling. This study used primary data collected through questionnaires. A pre-test on a different sample was carried out and the reliability coefficients results computed. A Cronbach’s alpha greater than 0.7 (ἁ>0.7) for all the variables was acceptable. Data analysis was conducted by use of descriptive statistics and inferential statistics using standard statistical techniques including pearson correlation coefficient and regression analysis. From the descriptive statistics, it was established that most taxpayers are not aware that Tax Procedures Act (2015) allows the Commissioner to recover any unpaid tax as a civil debt due to the state. Also, the results showed that through the basic education in schools and colleges, most respondents did not get basic understanding of taxation. Furthermore, the respondents indicated that they do not keep accurate records like trial balance and journals and ledgers are not updated. The correlation analysis established a strong positive and significant correlation coefficient between enforcement measures and value added tax compliance, while the regression analysis showed that enforcement measures had a significant positive beta coefficient. The correlation analysis established a strong positive and significant correlation coefficient between taxpayers’ sensitization and value added tax compliance, with the regression analysis showing that taxpayers’ sensitization had a significant positive beta coefficient. Lastly, tax invoice management system and value added tax compliance had a strong positive and significant pearson correlation coefficient, which was supported by the regression analysis, which established a significant and positive beta coefficient for the tax invoice management system. The study concluded that increased enforcement efforts by the Kenya Revenue Authority enforcement officers may lead to improved value added tax compliance. On taxpayers’ sensitization, the study concludes that increasing taxpayers’ sensitization to small and medium enterprises through tax seminars, taxpayers’ day and social media platforms could lead to improved value added tax compliance. To sum, the study concludes that adoption of tax invoice management system by the small and medium enterprises could lead to improved value added tax compliance. The current study recommends that Kenya Revenue Authority through their social media platforms, educate the taxpayers, especially small and medium enterprises on the content of the Tax Procedures Act (2015) so as to ensure that the taxpayers are aware of their rights and obligations, and those of the taxman. In addition, the government through ministry of education, should come up with curriculum that has taxation as basic and common unit from secondary school to universities.
Factors Affecting Tax Compliance among Small and Medium Enterprises in Embakasi East Region, Nairobi, Kenya
(Anastacia Letting Chepkorir, 2022) Letting, Anastacia
Revenue collection defined as Tax is a major source of the government revenue. However, tax compliance among traders in the informal sector is largely questionable. The core objective of this study is therefore to provide a theoretical analysis of the factors that may be contributing to reduced tax compliance among traders in informal sectors in Kenya. It sought to determine whether SMEs tax Education, tax Technology and Tax rates influence tax compliance among Small and Medium Enterprises in Embakasi East, Nairobi. With an aim of investigating the main hindrance to optimal tax administration and compliance among the informal, sector in Kenya. In order to achieve this, the researcher used a mixed methodology approach, which incorporated a cocktail of various designs that included descriptive design, stratified and simple random design to define not only the target population but also the sample size. The data was collected using questionnaires; administered to a sample population of 90 respondents drawn from Embakasi East sub-county. While, the secondary data was obtained from; KRA reports, publications, journals published and unpublished thesis. The data collected was later coded, analyzed using Statistical Package for Social Scientist and presented in form of charts, graphs and frequency tables. The findings indicated that there is a positive correlation SMEs tax Education, tax Technology and Tax rate with tax compliance. As such Kenya Revenue Authority should institute sustainable SMEs tax compliance measures upon consultation with taxpayers to establish the most suitable tax model. It should also endeavor in carrying-out periodic tax awareness campaigns, to empower the capacities of taxpayers and clear some misconstrued tax perceptions they believe in. Inferences indicated that the SMEs sector has immense potential to alleviate KRA revenue shortfalls if and only is harnessed fully. This can be achieved through carrying out Tax research among other approaches. Further collinearity analysis was done and the results revealed that tax technology had a positive and significantly related to tax compliance (r = 0.341, p-value=0.00<0.05). Further collinearity analysis was done and the results showed that tax rates had a positive and significantly related to tax compliance in Kenya (r = 0.298, p-value=0.00<0.05). The average overall standard deviation of 0.72 infers that 68% of the response was spread within one standard the taxpayer education had positive and significantly related to tax compliance (r = -0.148, p-value=0.00<0.05). The study recommends that Tax education should be rigorous to enlighten taxpayers about their duties and the role of tax in national development as they have a right to know how the national and county governments spend their taxes. There is a need for Large-scale structural reforms such as simplification of tax administration by ensuring the system is simple to use when registering as a taxpayer, filing the returns and payment of the same. Additionally, there is need of multi-stakeholder involvement in not only formulation but also in implementation of tax technology and There is a need for Large-scale structural reforms such as simplification of tax administration by ensuring the system is simple to use when registering as a taxpayer, filing the returns and payment of the same. Additionally, there is need of multi-stakeholder involvement in not only formulation but also in implementation of tax technology..
Factors Influencing Turnover Tax Compliance among Micro, Small and Medium Enterprises Sector in Westland Area in Nairobi, Kenya
(KESRA/JKUAT, 2022) Mutinda, Timothy
Turnover tax was introduced in Kenya in 2007 to enhance revenue collection, improve tax administration and reduce non-compliance and collection costs among the micro, small and medium enterprises. However, the level of tax compliance for the turnover tax has been very low since its implementation. The main objective of the study was to establish factors influencing turnover tax compliance among micro, small and medium enterprises sector in Westlands area in Nairobi. The specific objectives were to establish the effect of digitalization of service, compliance cost, taxpayer perception and deterrent measures on turnover tax compliance among the MSMEs in Westlands. The study was anchored on four theories; Ability to pay theory, Fiscal Exchange Theory, The economic deterrence theory and Technology Acceptance Theory. The target population was 241 MSMEs registered by the Kenya Revenue Authority and a sample size of 151 respondents. Primary data was collected through closed-ended questionnaire, with a response rate of 74%. The data was analyzed using descriptive and inferential statistics. The study findings indicated that the digitaliazation of services.(β1=0.315, p=0.000<0.05), taxpayer perception.(β3=0.278, p=0.006<0.05), and deterrence measures.(β4=0.330, p=0.000<0.05), had a statistically positive significant effect on turnover tax compliance among the MSMEs in Westlands while compliance cost .(β= -0.294, p=0.000<0.05), had a negative effect on turnover tax compliance among the MSMEs in Westland. The study results concluded that digitalization of service, compliance cost, taxpayer perception and deterrence measures significantly affect turnover tax compliance among the MSMEs in Westland. Based on the findings, the study recommended that KRA should pay more attention and focus on deterrence measures and develop policies relating to the deterrence measures. The study therefore suggests that, future studies to focus on different variable such as effect of tax audits on turnover tax compliance in Kenya.
Factors influencing Value Added Tax compliance among small and medium enterprises in Kangemi area, Nairobi county, Kenya.
(KESRA/JKUAT, 2022) Masau, Catherine
Tax compliance is important as it has a direct impact on revenue for most governments around the world. Despite the reforms that the Kenya Revenue Authority has been undertaking so as to increase revenue collection, it has of late failed to meet its revenue targets particularly VAT targets. This shows that there is a problem with VAT compliance in Kenya and this challenge forms the main motivation for undertaking this study. In realization of this situation, this study aimed at assessing the factors influencing value added tax compliance among small and medium enterprises in Kangemi area, Nairobi County, Kenya. The study had three specific objectives namely: To determine the effect of taxpayer education, systems reliability and compliance cost on value added tax compliance among small and medium enterprises in Kangemi area. This study was guided by four theories: Economic deterrence theory of tax compliance, Transaction cost economics theory, The ability to pay theory and Theory of technology acceptance. The study used descriptive research design and the population of this study was 120 and a sample size of 91 small and medium enterprises in Kangemi area that are registered for VAT compliance. The study used primary data. Findings indicated that taxpaer education was significant on VAT compliance with(0.000 ρ < 0.05),systems reliability was significant on VAT compliance with(0.005 ρ < 0.05) and compliance cost was significant on VAT compliance with (0.007; ρ < 0.05). The study concluded that taxpayer education, systems reliability and compliance cost affect VAT compliance. Based on the findings the study recommends on systems reliability that the KRA should enhance systems availability to encourage tax payers to be more compliant. Therefore, further research should focus on other variables such as effect of deterrent measures on Value Added Tax performance
Factors Affecting Turnover Tax Compliance among Micro and Small Enterprises in Kitui Municipality, Kenya.
(2022) Kaanzo, Esther
The current study sought to establish the factors affecting turnover tax compliance among micro and small enterprises in Kenya, a case of registered juakali artisans in Kitui Municipality, Kitui County. More specifically, the study aimed at determining effect of tax education, integrated tax system and enforcement measures on turnover tax compliance among Juakali Artisans in Kitui Municipality. The study was based on three theories, which include Social contract theory, Economic deterrence theory and theory of technological determinism. The study adopted descriptive research design. The target population of the study was 407 juakali artisans in kitui municipality. The study sample size was 202 respondents selected from a target population using stratified random sampling. This study adopted primary data collected through questionnaires. 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 was carried out by use of descriptive statistics and inferential statistics using standard statistical techniques including Pearson correlation coefficient and regression analysis. The descriptive results showed that Kenya Revenue Authority do not organizes for taxpayers Workshops frequently to educate taxpayers on tax laws related to Juakali Artisans in Kitui Municipality. Also, the descriptive analysis showed that the enforcement measures used by enforcement officers are coercive rather than persuasive. Further, the results indicated that the need for frequent online submission of turnover tax by the micro and small enterprises has not helped them in improving on their record keeping. The correlation coefficient established a strong positive and significant correlation coefficient between tax education and turnover tax compliance while the enforcement measures and turnover tax compliance had a significant positive relationship. Lastly, the regression analysis and correlation analysis established a significant positive relationship between integrated tax system with turnover tax compliance. The current study concluded that enhanced tax education among the Juakali Artisans is likely to lead to improved turnover tax compliance. Also, increased use of enforcement measures on Juakali Artisans in Kitui County could lead to increased turnover tax compliance among Juakali Artisans in kitui municipality. Increased use of integrated tax system could lead to increased level of turnover tax compliance. The current study recommends that Kenya Revenue Authority provide the taxpayers with breakdown of how the taxes collected are utilized by the tax authority which is likely to help improve on turnover tax compliance among the Juakali Artisans. Also, enforcement officers be professional on their enforcement efforts so as to help build positive image about Kenya Revenue Authority and the tax system. Lastly, more studies should be done using more variables like technology and taxpayers’ perception so as to establish which affect turnover tax compliance.
Factors Influencing Residential Income Tax Compliance among Property Owners in Kisumu West Sub County Kenya
(KESRA/JKUAT, 2022) Genevieve, Wasonga
The purpose of the study was to determine the factors influencing residential income tax compliance among property owners in Kisumu County. A case of Kisumu west. The specific objectives were; to assess the effects of cost of compliance on residential tax compliance among real estate investor in Kisumu west, to assess the effects of taxpayers knowledge on residential income tax compliance among real estate investor in Kisumu west and to evaluate the effects of technology on residential income tax compliance among real estate investor in Kisumu west. A descriptive survey was used for the study. The study targeted 2761 residential property owners in Kisumu West. Simple random sampling was used to select the 276 participants. The data was quantitative and was analyzed using descriptive and inferential statistics. The study found that was a significant negative effect of cost of compliance on residential tax compliance among real estate investor in Kisumu west. The investors hire experts to file their tax returns and also have to incur costs to access tax stations for inquiries. There was a significant positive effect of taxpayer knowledge and technology on residential income tax compliance among real estate investor in Kisumu west. Failure to comply with rental income taxation requirement is punishable by law. Taxation enables government to bring development to the citizens. Technology enables the investors meet their tax compliance obligations. The study recommends that residential property owners should be trained by KRA on the filling procedures and I-tax system usage to reduce the cost of outsourcing such service to experts. KRA should develop programs to create awareness on residential rental income tax compliance by residential property investors. KRA should also ensure that in the adoption of technology the end users should be educated and couched on the usability of such technologies
Factors affecting Value Added Tax compliance among manufacturing firms in Meru County.
(2022) Munyao, Damaris
Tax compliance is important as it has a direct impact on revenue for most governments around the world. Despite the reforms that the Kenya Revenue Authority has been undertaking so as to increase tax compliance it has of late failed to meet its revenue targets particularly Value Added Tax targets. This shows that there is a problem with Value Added Tax compliance in Kenya and this challenge forms the main motivation for undertaking this study. The general objective was to establish factors affecting value added tax compliance among manufacturing firms in Meru County, Kenya. while the specific objectives were to establish the tax awareness on Value Added Tax compliance in among manufacturing firms in Meru County, to determine the effect of cost of compliance on VAT compliance among manufacturing firms in Meru County and to establish the Value Added Tax audit on VAT compliance among manufacturing firms in Meru County The study was guided by The Fiscal Exchange, economic deterrence theory and transaction cost theories. The target population was 63 manufacturers in Meru town. The study will adopt the descriptive research design and census survey in data collection. This study will use primary data Primary data will be collected using structured questionnaires with closed questions Data was analyzed descriptive statistics and inferential statistics and presented on tables and charts. The finding of the study revealed that tax awareness, cost of VAT, VAT Audit affects VAT compliance among manufacturing firms in Meru County and the study was statistically significant with the evidence of p value was less than 0.05, ρ=0.002, 0.001 & 0.000 .In conclusion tax awareness, cost of VAT, VAT Audit had positive significant effect on VAT Compliance from manufacturing firms in Meru County. The study recommends that Kenya Revenue Authority management should make taxpayers aware that value added tax is computed, filed and tax due is paid on or before the 20th of every month succeeding the month in which sales are made. Therefore, it is suggested that more studies can be conducted using other variables such as the effect of environmental factors on VAT compliance among manufacturing firms in Nairobi County Kenya
Factors Affecting Withholding Value Added Tax Compliance Among Small and Medium Enterprises in Industrial Area, Nairobi County
(KESRA/JKUAT - Unpublished research project, 2022-09) Wafula, Wallace
The major issue facing Kenya Revenue Authority is that it has never been easy to convince all taxpayers to comply with the regulations of the tax system. Nairobi County plays host to a sizeable amount of businesses that make up a significant quantity of the county‟s robust economy. SMEs are continuously expanding and have the potential to increase the revenue flows but which have been otherwise left out of the tax bracket. Studies show that millions in taxes have been lost because tax evasion issue under SMEs has not been adequately addressed. As such, it emerged key enough for KRA to revert to the drawing board, reevaluate its VAT taxation mechanisms and device new approaches on how to carry out the reforms with one of them being withholding VAT with the sole aim of increasing the revenue collected from the business within Kenya. However, despite increase in revenue collection, withholding VAT has not been meeting its revenue targets over the last few years. This study was aimed at investigating the factors affecting Withholding VAT compliance among Small and Medium enterprises in Industrial area, Nairobi County The study was be guided by the following specific objectives: - to find out how taxpayer‟s knowledge management affects withholding VAT compliance, determine how cost of compliance affect Withholding VAT compliance and how tax compliance measures influence withholding VAT compliance. The main theories that will control this study are Economic (Deterrent) model and Social Influences Theory. The target population was active withholding VAT agents in Industrial area, Nairobi County. Random sampling was employed to arrive at a sample size of 60 respondents. The research design used in this study was explanatory study design. Primary data was collected through interviews by use of questionnaires with closed ended questions geared at Likert Scale. Data was coded for processing and SPSS used for data analysis to produce both descriptive and inferential statistics. Regression model was used for establishing the relationship between the study variables. The analysis of variance (Anova) was used on the average figures for all the measures of performance. The key findings of the study were that: knowledge management on taxpayers is essential for withholding VAT compliance, compliance costs deterred taxpayers from being withholding VAT compliant and enforcement measure compelled taxpayers to be withholding VAT compliant. The researcher recommends that regular tax trainings and adequate and simplified information should be provided on KRA website and other social platforms. KRA should respond promptly on issues of concern raised by taxpayers. And that KRA to offer comprehensive trainings in institutions to make taxpayers competent enough to cut down on costs of employing the services of tax experts and also training of staff .Regulatory bodies should consider controlling the amount of fee charged by tax experts. The fact that penalties on late filings and payments are already in place, they should be maintained at a considerable rate that is bearable by taxpayers. Regular audits and compliance should also be conducted by KRA to improve compliance levels. The researcher proposes quarterly audit checks
THE EFFECT OF TAX PAYER EDUCATION ON REVENUE COLLECTION IN KENYA, A CASE OF KENYA REVENUE AUTHORITY, LAIKIPIA STATION
(KESRA/JKUAT - Unpublished research project, 2022-09-01) CHRISTINE, MWANGI
The aim of this study is to investigate the effect of tax payer education on revenue collection strategy in KRA and was be guided by the following specific research objectives: to establish the extent to which staff training influences revenue collection, determine whether stakeholder sensitization program influence revenue collection and to evaluate the influence of social media on revenue collection strategy in KRA. The study adopted a descriptive research design. The target population was 100 KRA staff. The study used primary data to collect 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 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 doneusing 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 models were used to determine the type of the relationship that existed between independent and dependent variables. The study found that there exists a relationship between staff training, stakeholder sensitization program, and media education and revenue collection strategies in KRA. Therefore, study concludes that staff training, stakeholder sensitization program, and media education are statistically significant and they therefore influence revenue collection strategy in KRA. The study recommends that there is need for more training on the reforms and modernization at KRA and should be offered so as to improve on the skills, knowledge and professional capacity of the employees. This was to improve service delivery in terms of clearance and increased revenue; KRA should also focus on maintaining a good corporate image to ensure that its training programs are perceived in good light by the tax- paying public; KRA should strive to facilitate participation by all sectors and categories of taxpayers. There is also need to conduct a study on the challenges facing tax payer education and sensitization in Kenya
Factors Affecting the Collection of Presumptive Tax Among the Small Taxpayers in Kisumu Central Business District
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Ngugi, Martin
There is currently unresolved debate with two views on whether factors of collection of presumptive tax would increase or decrease tax collection 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. Broadly, the study sought to establish the factors affecting the collection of presumptive tax among the small and medium taxpayers in Kisumu CBD. Specifically, the study looked at costs of compliance, level of awareness, penalties and interests and technology and their influence on collection of presumptive taxes. The following three theories provided anchorage to the study: the theory of optimal taxation, ability to pay theory of taxation and the Allingham and Sandmo Theory. A descriptive design was adopted and a total of 269 SMEs were targeted from Kisumu Central Business District. Using stratified random sampling, the study sampled out 160 SMEs as the sample size. Information for the study was gathered from primary sources with use of questionnaires. The analysis of the collected data was done descriptively and inferentially. It was shown that the significant factors influencing payment of presumptive taxes include costs of compliance, penalties and interests, level of knowledge and technology. The study concludes that costs of compliance, penalties and interests, level of knowledge and technology all have significant effect on collection of presumptive taxes. The study recommends that Kenya Revenue Authority should consider the costs of compliance that tax payers meet under the presumptive tax system as allowable deductions. The Kenya Revenue Authority should consider the costs of compliance that taxpayers meet under presumptive tax as allowable deductions. There is need for KRA to increase expenditure on tax payers‟ awareness and education programs so that more tax payers are aware of their various tax obligations including the need to pay presumptive taxes. KRA should do targeted awareness programs on taxpayers who may not have the knowledge regarding the due date and availability of penalties and interests to enhance more collection of presumptive taxes. KRA should integrate the registration and filling of presumptive taxes into the i-tax platforms so as to save on the costs that the tax payers incurs and thus increased collection of presumptive taxes.
Factors Influencing Residential Rental Income Tax Compliance. A Case of Thika Town
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Njiru, Faith
This study aims to investigate factors affecting residential rental income in Thika town. The study was guided by the following specific objectives, to find out the influence of attitude and perceptions on residential rental income in Thika town, to evaluate the influence of Penalties on residential rental income in Thika town, to determine the influence of tax knowledge and education on residential rental income in Thika town. The study target population was 200 landlords and a sample size of 120 landlords. The study used primary data to collect through closed structured questionnaires to meet the objectives of the study. A pre-test on a different sample was conducted 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 indicated that attitude and perceptions had positive and significantly related to rental revenue collection (r = 0.456, p-value=0.00<0.05) as indicted in table above. This implies that attitude and perceptions was linearly related to residential rental income. The result also revealed that Penalties was positive and significantly related to residential rental income (r = 0.458, p-value=0.00<0.05). Lastly, the study showed that tax knowledge and education was positive and significantly related to residential rental income (r = 0.431, p-value=0.00<0.05). The study therefore recommends that the tax authority in Kenya (KRA) need to develop effective policies to develop a positive relationship and trust with taxpayers since this would encourage tax compliance. The study further established that punitive Penalties discourage compliance with residential rental income tax by property owners. The study therefore recommends that the tax authority in Kenya (KRA) should revise its Penalties to make them more severe to encourage tax compliance. The study recommends that KRA should develop training
Impact of Revenue Collection Systems on Revenue Collection Levels In county Government of Bomet.
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Korir, Benard
The collection of revenue at both national and county governments has been a big challenge and remains a major obstacle in national government and county governments in achieving their revenue collection targets and economic goals. The situation in Kenya in regard to revenue maximization by country governments has never yield a targeted result. It is for this reason that the current study was conducted to evaluate revenue collection systems and revenue collection levels with a focus on Bomet county government. The target population comprised of 240 finance and revenue officers from 5 Sub-County Offices in Bomet County. The study was guided by systems theory systems, transaction cost theory and technological determinism theory. The study adopted explanatory research design. Primary data was captured through use of closed ended structured questionnaire on five-point Likert scale. Stratified random sampling technique was employed to collect sample from 147 respondents. Data analysis was done using Statistical Package for Social Scientists (SPSS. Descriptive and inferential statistical analysis was employed. The results of the multiple regression analysis revealed that for every use of Automated Revenue Systems, there is an increase in the Revenue Collection Levels in Bomet County by 0.643 unit currencies (β1=0.643, p= 0.000). The results also revealed that for every use of Manual Revenue Systems, there is an increase in the Revenue Collection Levels in Bomet County by 0.239 unit currencies (β2=0.239, p= 0.000). Thus in comparison to the manual system, the study concluded that automated revenue systems have a positive and more significant influence on revenue collection levels in Bomet County. Based on the study findings, the study recommended that Bomet County government should adopt automated revenue systems. The study suggested that future research should be conducted on other determinants of revenue collection levels in Bomet County.
Factors Affecting Voluntary Tax Compliance Among Small and Medium Enterprises
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Mosonik, Mercy
The study aim to establish the factors affecting Value added tax compliance in among Small and medium enterprises in Langas East. Eldoret. The study was guided by the following specific objectives:- to investigate the effect of costs of compliance on Value added tax compliance in among Small and medium enterprises in Langas East. Eldoret to find out the effect of penalties and interest on Value added tax compliance in among Small and medium enterprises in Langas East. Eldoret, to determine the effect of level of tax knowledge on Value added tax compliance in among Small and medium enterprises in Langas East. Eldoret, to assess the effect of rates of tax on Voluntary tax compliance in among Small and medium enterprises in Langas East. Eldoret. The study adopted descriptive research design. The study target population was 1200 Small and Medium taxpayers in West of Nairobi. The study sample size was 120. This study used primary data collected through questionnaires. 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 was done by use of descriptive statistics and inferential statistics using Standard statistical techniques including Pearson correlation coefficient and regression analysis employed in the analysis. All the analysis was done using the statistical package for social sciences (SPSS Version.24). Analysis of variance (ANOVA) 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. The study found that Tax compliance cost, penalties and interest and tax rate significantly influences value added tax compliance. Based on study finding, this study recommends there is need for effective cost management when administering tax. Reduction in cost of compliance increases the number of registered traders which increase VAT Collection. The study further established that Tax rate encourage compliance with Voluntary tax compliance. The study therefore recommends that the tax authority in Kenya (KRA) should reduce tax rates to encourage tax compliance voluntary tax compliance
Effects of Tax Audits on Tax Compliance A Case Study of Small Medium Enterprises in Westlands Nairobi Kenya.
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Magdalene, Wavinya Mathendu
The Kenya Revenue Authority (KRA) introduced Tax Disclosure Programme (VTDP) as detailed in the Finance Act of 2020.This was envisioned to allow the taxpayers decriminalise their compliance issues on unpaid tax liabilities that have accumulated for a span of 5 years preceding 1st July 2020. The purpose of the study sought to find out the effects of tax audits on tax compliance among small medium enterprises in Westlands Nairobi Kenya.The specific objectives of the study were to investigate the impact of cost of tax audits, frequency of tax audits, and taxpayers risk attitude on Tax compliance. This research was guided by Economic Deterrence Theory (EDT), the Fiscal Psychological Theory (FPT) and the Planned Behavior Approach (PBA). This research employed a descriptive cross-sectional survey design and was conducted in Westlands Nairobi. This study employed the descriptive research design that involves the use of questionnaires in collecting data from the respondents. Data was collected from sample of 114 respondents selected from 160 amongst small medium enterprises in Westlands Nairobi. To analyses the data, SPSS was used to generate descriptive statistics and inferential statistics. Regression analysis was also done to obtain the relationship between theabove-mentioned variables and Tax compliance. Regression analysis established that cost of tax audit had a beta value of (β3) of 0.347 while frequency of tax audits had a beta coefficient (β1) of 0.204. Lastly, taxpayers risk attitude had a beta coefficient (β2) of 0.373. Model summary show that the predictor variables used explain 31.8% of variations in dependent variable meaning that there are still other variables that affect the tax compliance among small medium enterprises in Westlands Nairobi. The study recommends that KRA should pay attention and focus on taxpayer risk attitude towards tax audits. Based on the study, the government should have policy to payment of interest charges for late payment of taxes after tax audit findings. Further studies may be conducted on different variable such as effect of employee behavior on Tax compliance by small and medium enterprises within Nairobi
Influence of Tax Administration on the Growth of Small and Medium Enterprises in the Manufacturing Sector in Nairobi City.
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Marieta, Daisy
The consistently rising financial and economic needs of Kenya and the budget constraints that continually exist compromise the sustainability and development of the Kenyan economy. The motivation behind this study is to collect data on the influence of tax administration on the growth of SMEs in Nairobi City. More specifically it is limited to the influence of efficiency of tax administration, tax equity and fairness and taxpayer education with regards to the growth of SMEs. This wasfurther discussed in this study and further review empirical literature conducted by various authors on how these factors have catalyzed improvement in collection of revenue by the Kenya Revenue Authority to spur growth of SMEs.The taxpayers who participated in this study comprised SMEs in Nairobi City. There are over 10, 0000 SME taxpayers located in Nairobi. However, a sample size of 50 was considered for investigation where stratified random sampling method was used to arrive at the figure. The study employed the use of structured and open- ended questionnaires to collect primary data which was edited for consistency. It was entered in Statistical package for social science (SPSS) to enable a comprehensive descriptive statistical data analysis for ease of presentation. The findings indicated that tax equity and fairness on the growth of SME as supported by 89.79% on the statement that some SME sectors are taxed more while some receive bonuses and incentives which is unfair. The research concluded that the tax system was efficient and that it is designed in order to accelerate voluntary tax compliance. Tax inefficiencies gives rise to additional costs to the SMEs which include social costs, travelling costs, audit costs, administrative costs. These costs will divert funds meant to expand and facilitate growth of SMEs to comply with tax authorities. Further conclusions are made that taxpayer education has a significant effect on the growth of SMEs on the manufacturing industry in Nairobi City. The study recommends that Kenya Revenue Authority (KRA) should have an office in every county that will address tax issues at county level and the services to be offered should include tax penalties, filing of tax returns, tax computation and tax differentiation. KRA should also establish different deduction levels and apply the standard rate plan on the revenue turnover less standard deduction. KRA should continuously implement reforms on publicizing prosecution of non-compliant by providing incentives for voluntary compliance and the tax laws should be constantly reviewed to strengthen to seal loopholes that are being exploited by non-compliant SMEs. KRA should create more awareness on the tax compliance among SMEs through policy documentation which classify different betting firms’ entities.
The Determinants of Value Added Tax Compliance Among Small and Medium Enterprises in Machakos Munipality
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Faith, Akoth Ogutu
The study aim was to establish the determinants of Value Added Tax compliance among small and medium enterprises in Machakos Municipality, Kenya. The study was guided by the following specific objectives: - to determine the effects of tax audit on Value Added Tax compliance among small and medium enterprises in Machakos Municipality, Kenya; to determine the effects of cost of compliance on Value Added Tax compliance among small and medium enterprises in Machakos Municipality and to determine the effects of taxpayer awareness on Value Added Tax compliance among small and medium enterprises in Machakos Municipality. The study adopted descriptive research design. The study target population was 364 Small and Medium taxpayers in Machakos Municipality. The study sample size was 191 small and medium enterprises selected using stratified random sampling. This study adopt primary data collected through questionnaires. 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 will be carried out by use of descriptive statistics and inferential statistics using standard statistical techniques including Pearson correlation coefficient and regression 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. The descriptive results indicated that the cost of preparing, filing and submitting returns make significant part of indirect business costs. Further, the respondents were neutral on whether tax audit procedures by KRA are friendly and effective. However, was established that information on the aggregate taxes collected from value added tax and how they are spent is not readily available to SMEs through both print and social media. Correlation analysis showed a significant positive correlation coefficient between tax audit and Value Added Tax compliance, while cost of compliance and value added tax compliance had a strong negative and significant correlation coefficient. Lastly, correlation analysis indicated that there was a strong positive correlation between taxpayers’ knowledge and value added tax compliance. the correlation results were further supported by the regression analysis results where a significant positive regressioncoefficient was established between tax audit and taxpayers’ knowledge with value added tax compliance. however, the regression analysis results showed a negative and significant relationship between cost of compliance and value added tax compliance. The study also concluded that taxpayers’ knowledge can help improve compliance. Also, increased use of tax audit as a deterrent measure to value added tax noncompliance would lead to increased value added tax compliance. However, increasing cost of value added tax compliance would lead to reduced value added tax compliance by small and medium enterprises in Machakos Municipality. The study therefore recommends that Kenya Revenue Authority frequently use this as a deterrent measure as it seems to produce best result in in value added tax compliance. Further, more emphasis need to be done on sharing information with taxpayers concerning the Value Added Tax collected and how it is utilised. Similar research should be done using more variables so as to establish which other variables for example, technology and level of income affecting value added tax compliance. Similar studies can also be done in other towns in Kenya to establish whether similar findings will be obtained. A similar study can be done in Machakos Municipality but in a different sector like agriculture, service industry or even on individuals
Factors Affecting Tax Compliance
(KESRA/JKUAT - Unpublished research project, 2022-09-01) Muthiani, Moses
Taxpayer audit plays a huge role in raising tax administration and taxpayer compliance by influencing the behavior of the taxpayer. This study intended to establish the effect of tax audit on tax compliance by SMEs in Nairobi. The study was guided by the Policeman Theory, Agency Theory, and Classical Theory of Tax Compliance. The study adopted descriptive research design, and targeted small and medium enterprises (SMEs) in Nairobi Central Business District in Nairobi County. Stratified and systematic random sampling technique was used to select 50 respondents. Data was collected using a semi-structured questionnaire, and thereafter analyzed for final report writing. Quantitative data was analyzed using descriptive and inferential data analysis techniques. The resulys indicated that the SMEs sector was dominated by young people who had good education. It clearly emerged that tax audit, taxpayer awareness and employee competence, all had significant influence on the level of tax compliance by SMEs in Nairobi. Statistics indicated that 59% off the respondents agreed that tax audit had influence on tax compliance of small and medium businesses. Furthermore, 53%) of the respondents agreed that level of tax audit often determined level of tax compliance by SMEs. There was also a positive relationship between level of tax audit awareness and tax compliance by SMEs, with 85% of the respondents holding this view. It also was also evident that employee competence played a key role in influencing tax compliance by SMEs in Nairobi. An overwhelming majority seemed to agree that employee competence positively affected tax compliance by SMEs. The research generally concluded that each one of the three independent variables (predictors) had a significant influence on the level of tax compliance by SMEs. It clearly emerged out that tax audit dictated the understanding of small and medium enterprise owners on the need to be tax compliant. Taxpayer awareness was equally critical in determining the level of tax compliance by SMEs. This ensured that small and medium business owners acquired requisite knowledge regarding the need to pay their tax as required by law. Similarly, employee competence impacted positively on the general tax compliance by SMEs, as this further encouraged professionalism in firms and greatly helped them in meeting their corporate objectives. The study recommended that the government, through KRA, should liaise with the larger business sector to expand tax auditing to the SMEs sector to encourage all the players to always be tax compliant. It is also important for the government to enhance taxpayer awareness through effective platforms such as seminars, media adverts or roadshow campaigns for all business owners to understand the need for being tax compliant. Also, as has been evidenced through SMEs in Nairobi that employee competence was critical in tax compliance; the government should encourage all businesses in the SMEs sector to emphasize on investing on their staff for optimum performance.

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