1.2022

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Browsing 1.2022 by Subject "Presumptive Tax"

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    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    (KESRA/JKUAT - Unpublished research project, 2022-09-01) Ngugi, Martin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.