2. 2022

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Browsing 2. 2022 by Subject "Enforcement measures"

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    Factors affecting Value Added Tax Compliance among Wholesalers in South of Nairobi County,Kenya
    (KeSRA/Moi Unpublished Research Project, 2022) Ombati, Alex Kebaso
    Taxation is considered the primary source of government funding and plays a critical role in social economic and political development of any nation across the globe. “Despite ongoing tax reforms by the government, a large section of small business tends to exhibit low tax compliance even though they are eligible to pay taxes. This is evidenced by many governments being unable to meet their target revenue collections. The main objective of this study was to determine the factors that affect VAT compliance in South of Nairobi, Kenya. The specific objectives were to determine the effect of taxpayer perception on VAT compliance, establish the effect of enforcement measures on VAT compliance and to establish the effect of stakeholder sensitization on VAT compliance. The study was guided by Fiscal Psychology Theory, Economic deterrence theory and Stakeholder’s theory. The study employed explanatory research design that involved the use of a structured questionnaires in collecting primary data. A pilot study was conducted in West of Nairobi Kenya to test the reliability and validity of research instruments. The study population was 4053 licenced wholesalers with South of Nairobi. A sample size of 364 was determined by using Yamane 1967 formula and selected using stratified random sampling. Data collected was analyzed using descriptive and inferential statistics. The relationship between the independent variables mentioned above and VAT compliance was obtained by using regression analysis. Regression analysis established that taxpayer perception had a beta coefficient (β 1 ) of (0.314, P=0.000<0.05) while enforcement measures had a beta coefficient (β 2 ) of (0.253, P=0.003<0.05). Lastly, stakeholder sensitization had a beta coefficient (β 3 ) of (0.421, P=0.001<0.05). Model summary show that the predictor variables used explain 55.9% of variations in dependent variable meaning that there are still other variables that affect the wholesalers in South of Nairobi County. The study made conclusions on taxpayer perception, enforcement measures and stakeholders’ sensitization that there was a significant positive relationship between all independent variables and Value added tax Compliance among wholesalers in south of Nairobi Kenya. The study therefore recommends that the government should ensure efficient in utilization of revenue generated for the benefit of its people so that the citizens can have more confidence in them and support their administration by being VAT compliant. KRA should review its policies on court sanctions, fines and penalties on taxpayers and strictly enforce the deterrence sanctions since tax deterrence sections influence tax compliance level by wholesalers in south of Nairobi Kenya. Also, KRA should emphasize on VAT awareness of taxpayers as this will enhance their compliance levels. Therefore, there is need to undertake other studies related to the same topic with wide considerations to other determinant like technology and online filing on VAT compliance.
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    Factors affecting Value-Added Tax Compliance among E-commerce Small and Medium Enterprises in Westlands, Nairobi, Kenya
    (KeSRA/Moi Unpublished Research Project, 2022) Musungu, Byron
    Value Added Tax compliance is presently a topical coverage issue, mainly in growing nations, as governments are in search of approaches to enhance performance in tax revenues to finance their budgets. It is a challenging issue to many SMEs, mainly for SMEs engaged in E-commerce businesses hence the focus of this study. Therefore, this study was to determine the factors affecting value-added tax compliance among e-commerce small and medium enterprises in Kenya, a case of small and medium enterprises in Westlands Nairobi County. The specific objectives of this study were to establish the effect of tax knowledge, tax Moral, technological factors and enforcement measures on VAT in SMEs engaged in E-Commerce businesses. The data reviewed that led to the problem statement for the study covered three years between 2018 and 2020. The theories supporting these study variables included the Economic deterrence theory, Fiscal psychology theory, Tax morale theory and Ability to pay theory. This study adopted explanatory research design to determine the causal relationship between tax knowledge, tax Moral, technological factors, and enforcement measures and VAT compliance. The target population of study included 1,223 small and medium enterprises E-commerce businesses in Westlands Nairobi County. Yamane formula was used to determine the sample size selection of 301 respondents for this study systematic sampling technique was used. Piloting of the questionnaire was carried out on SMEs in Nairobi central business district to test its validity and reliability. The study collected primary data through close-ended questionnaire, with a response rate of 83%. The data was analyzed using descriptive and inferential statistics to determine the association between variables, with the measurement of variables based on 5-point Likert Scale. Correlation and regression analysis provided an understanding of the relationship between the study variables. On Regression, tax knowledge, tax Moral, technological factors and enforcement measures had a strong positive correlation with value added tax compliance up to 61.3% or (R= 0.613). (R 2 ) of 0.375 reveal that when other factors are held constant, tax knowledge, tax Moral, technological factors and enforcement measures caused a variation of 37.5% on VAT compliance. The study findings indicated that tax knowledge, tax Moral, and enforcement measures had a statistically positive significant effect on VAT compliance as per Beta coefficients of tax knowledge (β1=- 0.220, p=0.000<0.05), tax Moral (β2=0.449, p=0.000<0.05) and enforcement measures (β4=0.221, p=0.003 <0.05). However, technology factor showed no significant relationship with VAT compliance (β3= 0.075, p=0.302>0.05). The study results concluded that tax knowledge, tax Moral, and enforcement measures affect VAT compliance. Based on the findings, the study recommended that the government should adopt modern tax remittance platforms for ease of value added tax remittance. The study further recommends future studies can be conducted on different variables such as on effect of administrative reforms on VAT compliance among E-commerce large taxpayers to provide additional insights and add to the existing understanding of issues explored in this study.