4.2019

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Browsing 4.2019 by Subject "Compliance Cost"

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    Factors affecting rental income tax compliance among real estate investors in east of Nairobi region
    (KESRA/JKUAT - Unpublished research project, 2019) Ogendo, Tobias
    The main issue faced by all tax authorities is that it has never been easy to persuade all taxpayers to comply with the regulations of a tax system. Real estate sector is one of the fastest growing sectors of the economy in Kenya yet taxes collected from this sector have continually been on decline for the last five years. Taxation is the primary source of revenue for governments throughout the world to implement their social and political agendas and to deliver services to the citizens. In Kenya, increased government expenditure and the need to finance government activities using local sources of funds has called for the government to bring into the tax net sectors that have remained untaxed before. In 2012/2013 budget speech a lot of emphasis was put that rental income was subject to taxation. Previous statistics indicated that less than half of landlords and developers had complied with tax requirements. This study was carried out to establish how real estate investors had responded to the new taxation measures and the factors that affect their compliance such as taxation knowledge gaps, tax penalties and cost of compliance to rental income tax among landlords in East of Nairobi region that is Pipeline, Embakasi and Tassia. A sample of 100 respondents were selected to take part in the study using self-administer questionnaire as primary method to collect data since it’s a convenient sampling technique. The data collected was analysed 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 models was adopted. The study found that the considered research variables explain 29.1% of variation in residential rental income tax compliance by estate investors thus the study recommends an additional study on the other factors that are represented by 70% and also influence compliance of residential rental income tax by real estate investors. Again further study also need to be done on the same topic but covering a different location other than in Nairobi so as to determine whether there exist some variances in the findings
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    Factors influencing remittance of rental income tax by residential property owners in Nairobi county.
    (KESRA/JKUAT - Unpublished research project, 2019) Mutinda, Celestine Mutheu
    The purpose of the study was to examine the factors that influence the remittance of rental income tax in Nairobi County. The study variables included system coverage, taxpayer education, itax technology and compliance cost. The study adopted a descriptivesurvey design. The target population of the study comprised of 97,801 rental income earners in Nairobi and who are registered rental income taxpayers by the Kenya Revenue Authority. Cochran’s sampling formula was used to calculate sample size of 369 respondents. The collection of primary research data was done using questionnaires that were sent to the selected respondents through their respective email addresses. Prior to being administered to the respondents, the research instrument was pre-tested to determine its reliability and validity. Research data was analyzed using Statistical Package for Social Sciences (SPSS) computer software and findings presented in form of tables and figures. Multiple regression analysis was carried out to establish the relationship between itax technology, system coverage, taxpayer education and compliance with remittance of rental income tax. Majority of the respondents (61%) were property owners who pay rental income tax from the residential properties. The research findings show that majority of respondents strongly agreed that taxpayer education, itax technology, compliance cost and system coverage affect the remittance of rental income tax. Seventy six percent (76%) of respondents strongly agreed that tax workshops and clinics educate taxpayers in Rental Income Tax (RIT). Sixty three percent (63%) of respondents agreed that itax system has enhanced the efficiency and effectiveness of RIT collection. Ninety two percent (92%) of respondents were of the opinion that the tax rate of ten percent on RIT is too high. Eighty four percent (84%) of the respondents indicated that high compliance costs are not a discouragement for taxpayers to be compliant with RIT. On system coverage, 75% of respondents noted that good system coverage promotes the filing of RIT. The regression analysis generated the following regression coefficients; taxpayer education (β=0.313), itax technology (β=-0.209), compliance cost (β= 0.053) and system coverage (β=0.303). The most significant factor among the four factors was taxpayer education, followed by system coverage and then itax technology. The least significant factor was compliance cost. It is concluded that system coverage, itax technology, compliance cost and taxpayer education have a positive effect on remittance of rental income tax. In order to improve compliance and remittance of rental income tax, taxpayer education must target existing and new property owners in a bid to encourage them to declare and pay rental income tax. The improvement of the itax system can be done if KRA collects feedback from users on the experiences and challenges of using the system to file tax returns. There may be need to reduce the rental income tax rate as a motivator to rental property owners to declare their rental income and remit Rental Income tax (RIT). The reach of the itax system should be made wide so that all potential taxpayers can have access to the itax system. The KRA should also ensure that itax system downtime is eliminated so that the system is available around the clock.