2. Post Graduate Diploma

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Capital allowances and growth of listed manufacturing firms in Kenya
(KESRA/JKUAT - Unpublished research project, 2020) Syuki, Winfred Makaa
Manufacturing in Kenya has been on the decline for a considerable period with its contribution to Gross Domestic Product stagnating at 10 % from the 1960’s. According to the Government of Kenya, the manufacturing sector has high, yet untapped potential to contribute to employment and Gross Domestic Product growth. Generally, the manufacturing sectors’ average growth percentage has continued to stagnate at three to four per cent over the years. The performance of the manufacturing sector is affected by several factors one of them been the high cost of doing business. Excessive taxation in the form of high tax rate, double and multiple taxations are some of the challenges facing manufacturing industries. To mitigate this challenge, the government has advanced various tax incentives to the manufacturing sector. However, despite the various tax incentives being made towards these firms, their effect on their performance had not been investigated. Hence, this study sought to fill this gap. Therefore, the main aim of this study was to assess tax incentives and their effect on the growth of selected manufacturing firms in Kenya. Specifically, the study sought to; examine the effect of capital allowance on growth of listed manufacturing firms in Kenya. The study employed longitudinal design to determine the effect of capital allowance tax incentive on performance of listed manufacturing firms in Kenya. The target population for the study was 13 manufacturing firms listed at the Nairobi Securities Exchange in Kenya during the years 2012 to 2018. The study adopted a census design since the entire population was considered. The study measured the entire target population and a census was carried out to systematically acquire and record information regarding secondary data on company boards for each of the thirteen listed firms. The study used secondary data sourced from the listed firms’ published annual reports and statistics. Secondary data was retrieved from manufacturing firms’ websites, Nairobi Securities Exchange websites, Capital Markets Authority Library and Kenyan Investors website. The study utilized both descriptive and inferential statistics using Standard statistical techniques including Pearson correlation coefficient and regression analysis was employed in the analysis. The study estimated a Panel Data Regression Model. All the analysis was done using the statistical package for social sciences (SPSS Version.24). Analysis of variance (ANOVA) will be 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 research questions. In multivariate analysis, multiple regression analysis models were used to determine the type of relationship that existed between independent and dependent variables. From the findings, the study found that there was a strong positive correlation between the listed manufacturing firms in Kenya and W&T. The study further reveals that there was a negative relationship between ID and IBD and growth of listed manufacturing firms in Kenya. Based on the study findings, the study concluded that, capital allowance incentives affected the growth of selected manufacturing firms in Kenya positively. The study also concluded that various tax incentives needed to be made sustainable in order to ensure consistency in the performance of the firms.
Challenges Facing Taxation of the Informal Sector in Kenya: Case Study of Nairobi County
(KESRA/JKUAT - Unpublished research project, 2018) Memu, Pamela Kitinga
The large number of potential taxpayers in the informal sector, and the difficulties of monitoring “hidden” entrepreneurs and small-scale firms, can give rise to serious revenue collection costs for tax authorities in developing countries. At the same time, the revenue potential of taxpayers in the informal sector is fairly modest, as their taxable incomes are usually quite low. According to a World Bank study in year 2006, Kenya’s informal sector constituted 98 percent of all businesses in the country, absorbed annually up to 50 per cent of new employment seekers and had an employment growth rate of 12-14 percent. In the endeavor to realize this goal, KRA faces several problems when dealing with the informal sector. Some of these problems include financial literacy level of the taxpayers, book keeping and capital requirements. Fischer tax compliance model provides a framework for understanding the influence of socio-economic and psychological components on taxpayer’s compliance decision. AS theory holds that the government deters tax evasion through a sanction arrangement and audits. A tax payer will decide to violate the fiscal laws and evade his or her tax obligations when he or she perceives that the cost of evading tax is too low, believing he or she does that he or she is unlikely to be detected or audited. The SMEs are prone to tax evasion as they face difficulties in complying with tax laws. They are expected to comply with strict deadlines, keep proper books of accounts. This kind of environment leads to tax evasion. The study adopted a census research design with a target population of 79. This study used primary data collection through questionnaires while Secondary data was collected from published materials containing the relevant information on revenue collected from the informal sector over a period of stipulated time. The study was analyzed by use of inferential statistics and descriptive statistics by use of SPSS version 24 and the multi regression model was adopted. Findings revealed that there is a strong positive correlation between the variables of the study as shown by the 69.4% while 48.1% of variations in the dependent variable can be explained by changes in the independent variables hence, the remaining 51.9% is representative of other factors not accounted for in the study. Findings reveal that problems like tax complexity; low tax morale, low tax compliance and shadow economy may all be reduced by increasing the level of taxpayers' (individuals') financial literacy. Findings also reveal that most micro-enterprises do not keep books of accounts that will allow them to extract useful accounting information due to lack of accounting knowledge. The study thus recommends that policy makers should introduce stringent measures with respect to tax penalties and fines on the informal sector firms and tax payers who violate and act as an obstacle in the administration of this tax.
Challenges Facing Value Added Tax Refunds Payment Process by Kenya Revenue Authority
(KESRA/JKUAT - Unpublished research project, 2018) Mohamed, Fatuma Milgo
Delay in VAT refunds payment has led to businessmen and traders accuse KRA of being quick to collect tax, but slow in refunding. In recent past KRA has put in place several measures to ensure that VAT refunds are timely processed and paid. These include staff training, introduction of tax audit, information technology, compliance checks, legislation and compliance laws. These measures are geared towards accelerating VAT refund processes. However, this has not been the case, and majority of taxpayers have to wait for upto three years before receiving tax refunds. The objective of the study was to establish the perceived challenges facing Value Added Tax (VAT) refunds payment process by Kenya Revenue Authority with an aim of establishing administrative impediments facing the process. The study used both qualitative and quantitative research methods to collect and analyze data. Structured questionnaire was administered to collect primary data from a population of 200 employees of Kenya Revenue Authority in the Domestic Taxes Department, Refund section. Ethical consideration was adhered to when collecting data from respondents. The study found that the further improvements are required in the area of increasing VAT refund administration capacity with an aim of increasing timely refund application, processing and payment. The Tax Authority needs to pay attention to taxpayer education, VAT refund compliance and timely audits. Finally, there is the need to recruit more staff and embark on training of newly engaged staff.
Customer-Focused Service on Tax Compliance in Kenya
(KESRA/JKUAT - Unpublished research project, 2022-09-01) MUTHURI, JANE
Kenya Revenue Authority is involved in revenue collection mainly from taxation of taxable persons in the economy. Small businesses are often involved in tax evasion practices deliberately or without knowledge. It is not an easy fete to convince the small and medium enterprises to comply with tax laws. It is for this reason that customer service is seen as a good strategy through which tax compliance among the Small and Medium Enterprises. This study had the general objective of assessing the sequel of customer service on tax compliance in Kenya. The study had three specific objectives: To find out the effect of tax payer training on tax compliance, customer care staff training and to examine how communication to customer strategy on tax compliance, a case of SMEs in Nairobi Central Business District. The study adopted a descriptive research design because it had the objective of establishing the relationship between the variables. The study had a target population of 1,500 Small and Medium Enterprises operating with the Nairobi Central District. A sample of 150 was selected through stratified sampling which acted as a representative of the entire population. The study used descriptive statistics in data analysis. The study has found out that the most enabling factor is customer communication, followed by customer care and the lowest influencing is taxpayer training. Further, the study has found there is a need to improve the customer service of KRA in order to foster voluntary tax compliance. The regression model has found out that 53.7 % of the variations of Turnover Taxes is explained by taxpayer training, customer care training and communication strategy. The study recommends that the KRA needs to establish a strategic customer care department in order to facilitate information dissemination which will foster tax compliance among the SMEs in Kenya. Tax training should be done regularly and the appropriate communication channels should be used.
Determinants of alternative dispute resolution mechanism among medium taxapayers: a case study of medium taxpayers in Nakuru County, Kenya.
(KESRA/JKUAT - Unpublished research project, 2020) Kaluhi, Gladwell Jones
The study aims to investigate the Determinants of ADR mechanisms among medium taxpayers in Kenya. The specific objectives of the study included: to assess the influence of perceived benefits on the adoption of ADR mechanisms in tax administration in Kenya; to examine the influence of perceived ease of use on the adoption of ADR mechanism in tax management in Kenya and; to examine the influence of ADR knowledge and awareness on the adoption of ADR mechanism in tax management in Kenya. The study variables included perceived benefits, perceived ease of use and knowledge and awareness which are the independent variable of the study. The dependent variable is ADR mechanisms. The study employed descriptive research design and the target group was 1200 medium taxpayers registered by KRA, Nakuru County. Stratified sampling technique used to sample the population and the sample size comprised of 120 medium taxpayers. The study adopted primary data and research instruments were closed structured questionnaire Data analysis conducted using Statistical Packages for Social Sciences (SPSS) version 2017. The study analyzed data through descriptive and inferential statistic. The study found out that The coefficient for perceived benefits is -0.148, so we expect a -0.148 unit decrease in the adoption of ADR holding all other variables constant. The coefficient for perceived ease of use is 0.341 so for every unit increase in perceived ease of use, we expect 0.34 point increase in adoption of ADR. For knowledge and awareness, is represented by a coefficient of 0.298, meaning for every increase in perceived ease of use a 0.29-unit increase in adoption of ADR is predicted holding all other variables constant. The study recommended that The regulation on ADR in tax disputes given by KRA should be aimed at making ADR process less costly to ensure all the taxpayers and the KRA can benefit from it. The KRA should carry out intensive creation of awareness and sensitization so as to encourage the use of ADR to citizenry
Determinants of Efficient Service Delivery of Government Agencies at Huduma Centers
(KESRA/JKUAT - Unpublished research project, 2022-09-01) CHEPKWONY, PURITY
Service industry is been critical in provision of services to businesses as well as final consumer. Service delivery in public sector is of utmost importance to the various government agencies across the world. Most governments across the world are evaluated against the level of service delivery to citizens. Public service delivery has been the basis of formulation of various policies by governments across the world. Efficient of service delivery in public sector has been a major concern across the globe. However, government agencies or institutions face challenges that hinder them from providing efficient services to its citizens. The current study therefore seeks to establish the influence of the influence of staff competencies, electronic queue management and one-stop model on efficient service delivery. This study was guided by servqual theory that was developed by Parasuraman, Berry and Valarie to access to assess customer perceptions of service quality in service industry. This study adopted descriptive research design as the strategy for data collection, analysis and presentation of study findings. The current study target all customers visiting Huduma centers to obtain government services in a given day. On average, there are approximately 2000 citizens served on daily basis from all the 45 Huduma centers in Kenya. The sample size for the study was determined by use of Naissuma formula. In respect to this, a sample size for the study was 95 respondents. The sample size was selected using stratified random sampling. Data for the study was collected using structured questionnaires. The pilot study for this study was carried out in Huduma center in Nakuru among respondents who did not take part in the actual study to avoid data contamination. The pilot study sample was 10 respondents. To ascertain the validity of the research questionnaire, the study constructed the questions in the questionnaire in line with the research objectives. In addition, the study sought the input of the research supervisor and four KRA officers working at Huduma centers to establish the relevance of the questions in the questionnaire. Reliability was ascertained through the use of Cronbach’s Alpha test of internal consistency. Data obtained from the field through the use of questionnaires was entered into Statistical Package for Social Sciences (SPSS). Data analysis was descriptive and inferential. Frequencies, percentages, means and standard deviations was used for descriptive analysis while simple and multiple linear regressions was used for inferential statistics. The study was of great significance to both practice and theory. The study findings was used by the government agencies to evaluate policies and services offered to the citizens with an aim of improving the efficiency of public service delivery. Academicians and future researcher in the line of public service delivery may use the findings that was obtained from this study to conceptualize their studies and develop their literature review.
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.
Determinants of Monthly Rental Income Tax Compliance among Landlords in Mavoko Sub-County in Kenya
(KESRA/JKUAT - Unpublished research project, 2020) Mateli, Nancy Mwende
Tax is the main source of government revenue in developing countries as well as developed ones. Although collection of tax has been a challenge especially in the informal sector specifically from landlords who own residential property. The main objective of the study was to establish the determinants of monthly rental income tax compliance from landlords in Mavoko sub County in the last three years. The study looked at the tax rates, tax policies and procedures, and taxpayer knowledge by landlords. The study was guided by; the expected utility theory, benefits received theory, fiscal psychology theory, social psychology theory, and the ability to pay theory. The study was carried out in Mavoko Sub County for the year 2016, 2017 and 2018. The study adopted a descriptive research design targeting 544 landlords in Mavoko Sub County in Kenya. The researcher used a stratified random sampling as well as geographical sampling method to get the right sample size from the target population of 544 landlords where a sample size of 54 landlords was picked where every tenth person was picked from the list of landlords. A semi structured questionnaire was used to collect data from the landlords. The data was then keyed, coded and analysed using the SPSS software, Microsoft excel, inferential and descriptive statistics. The regression model used had three dependent variables namely, tax knowledge, tax rates, and tax procedures and regulation while monthly rental income tax compliance was the dependent variable. The study established that at 5% level of significance, tax knowledge, tax rate, tax procedure and regulation all had a positive beta with p-values less than 0.05. The study concluded that the determinants of monthly rental income tax compliance from landlords in Mavoko Sub County include tax rate, tax knowledge and lastly the prevailing tax procedures and regulations. The study recommends that KRA should harmonize the current monthly rental income tax rate with the East Africa Community so that a standard rate is established. KRA should organize for more tax clinics, seminars and workshops in Mavoko Sub County and provide incentives for those tax payers who attended such education programs. KRA should simplify the tax procedures and regulations and avoid too many bureaucracies in tax administration. The study was limited by the corona pandemic and a sample size of 54 respondents who were the landlords in Mavoko Sub County. Future studies should be conducted covering a relatively larger sample size, probably the whole County or more than one county in Kenya and during pandemic free times. The results of the study are expected inform strengthening of policies and regulations governing monthly rental income tax in Kenya as formulated by KRA. If well implemented, there would be increased compliance with monthly rental income tax which would increase the amount of tax revenues generated and thus the overall growth of the economy.
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
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.
Determinants of residential rental income tax compliance by landlords in west of Nairobi district Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Njiru, Anne Rita Makena
Kenya still faces the challenge of low tax compliance in the real estate sector. Therefore, the primary goal of this research was to study factors determining collection of rental income taxes by Kenya Revenue Authority in west of Nairobi district. The specific objectives were to establish the effect of property owners’ perception on monthly residential rental income tax compliance, to find out the effect of tax knowledge on residential rental income tax compliance and finally to determine the effect of technology on residential rental income tax compliance. The theoretical framework was based on the theory of economic deterrence, theory of planned behavior and theory of technological acceptance. The study adopted a descriptive research design. The target population comprised of 19,000 residential property owners who are taxpayers in West of Nairobi district. The study selected a sample of 190 respondents using simple random sampling. Primary data was used where questionnaires were used for primary data collection and for secondary data was obtained from journals which represent academic research. Data analysis was done using descriptive statistical tools and the multiple regression method with the help of statistical package for social sciences (SPSS). The study finding indicated that taxpayer perception, tax knowledge and technology signficantly affects tax compliance in west of Nairobi district. The study concluded that taxpayers’ perception, tax knowledge and technology are significant determinants of residential rental income tax compliance by landlords in West of Nairobi district in Kenya. The study recommends that KRA and the government should investment more in technology and also create awareness on technology usage by tax payers to encourage residential rental income tax compliance.
Determinants of Residential Rental Income Tax Compliance by Property Owners in Thika Town
(KESRA/JKUAT - Unpublished research project, 2018) Mbeni, Caroline Kalunde
Tax compliance has been a crucial subject to researchers in many countries around the globe. In most third world countries house rental taxation has been classified as economic. In Kenya, statistics indicate that less than half of property owners and developers comply with rental income tax requirements. Thus, this study sought to examine the determinants residential rental income tax compliance by property owners in Thika town. The study employed a descriptive research design and collected data from a sample of 58 property owners 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 and residential rental income tax compliance and an insignificant positive relationship between attitude and perception and residential rental income tax compliance. The study also found an insignificant negative effect between income levels, fines and penalties and residential rental income tax compliance by property owners. The study concluded that tax rate, tax knowledge, attitude and perception positively influence residential rental income tax compliance while income levels, fines and penalties negatively influence residential rental income tax compliance by property owners. It was recommended that KRA develops training programs to create awareness on residential rental income tax compliance by property owners and that the tax authority in Kenya (KRA) should develop effective working policies to develop a positive relationship and trust with taxpayers. It was recommended that further study be carried on the other factors that affect compliance with residential rental income tax and study to cover other areas besides Thika Town.
Determinants of residential rental income tax compliance in Limuru town, Kiambu County, Kenya
(KESRA/JKUAT - Unpublished research project, 2020) Waithira, Nelly Njoki
Economic growth in any country is facilitated by tax compliance by tax payers. In Kenya, the persistent failure by Kenya Revenue Authority to meet its revenue collections target point to low tax compliance by taxpayers. This study’s main objective was to examine the determinants of residential rental income tax compliance in Limuru Town. Specifically, the inquiry looked at the cost of compliance, tax knowledge, enforcement measures and tax-payers attitude and its effect on tax compliance behavior of residential rental income. The economic deterrent theory, fiscal exchange theory and social influences theory provided anchorage to the study. This study adopted descriptive cross-sectional design to collect data. The target population was 640 landlords owning residential properties in Limuru town and using a non-probability sampling technique, the sample size was 64 landlords. Primary data was collected through questionnaires and it was analyzed using Statistical Package for the Social Sciences (SPSS) software program and descriptive statistics of measures of central tendency and multiple regression for analysis of data. The results were presented in tables, figures and pie charts. From the findings, enforcement measures such as penalties and interest had the largest but negative effect on rental income tax compliance among property owners in Limuru town followed by tax knowledge that also had an inverse relationship while tax payer attitude and the cost of compliance had a positive effect. The study concluded that enforcement measures and tax knowledge had negative and significant effect on rental income tax compliance among property owners in Limuru town while tax payer attitude and cost of compliance had a positive and significant effect. The study recommended that KRA should consider relaxing some of the enforcement measures as tightening these measures only encourage the property owners to device innovative ways of noncompliance with rental income tax. KRA should organize for more formal training on rental income tax among the property owners in Limuru town. Corruption and embezzlement of funds in government institutions in Kenya is one thing that need be seriously addressed so as to cultivate positive attitudes among the taxpayers. KRA should also pay attention on the costs of compliance among the property owners since high costs have a meaningful effect on compliance of the property owners as far as the rental income tax is concerned.
Determinants of self-assessment system on the compliance of taxpayers in the entertainment industry in Mombasa County
(KESRA/JKUAT - Unpublished research project, 2018) Mangwana, Elly
The self-assessment system in taxation has been implemented as way of enhancing compliance of taxpayers. Several studies have captured the effect the system has on the taxpayers’ compliance in areas such as Malaysia, India, Ethiopia and Nigeria. This research therefore focuses on studying the determinants of self-assessment system in compliance of taxpayers in the entertainment industry in Mombasa County. The study, aiming to build on three theories; Economics of Crime, Expected Utility Theory and Ability to Pay Theory and Deterrence Theory was focused on achieving the following particular objectives; to find out whether obtaining tax knowledge for the self-assessment framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County; to establish whether engaging external tax professionals tax audit and investigation with regards to the self-assessment framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County; and to evaluate the record keeping practices with regards to the self-assessment framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County. The research was guided by the following questions; Does the obtaining tax knowledge for the self evaluation framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County?; to extent does engaging external tax professionals’ tax audit and investigation with regards to the self-evaluation framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County?; and do the record keeping practices with regards to the self-evaluation framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County? Descriptive research design was applied. The target population was 45 establishments in Mombasa County, and due to this small number, conducting a census was found to be the appropriate. The data was collected using questionnaires and then analyzed using SPSS Version 23. The analyzed data was then presented in form of tables and figures. Study findings revealed that tax knowledge, external tax professionals and record keeping have significant effect on tax compliance in in the entertainment industry in Mombasa County with t=5.274; p=0.000, t=6.426; p=.000 and t=2.677; p=0.011 respectively and collectively with R-square value of 0.855. From the findings, the study recommends that tax knowledge is important in regards to self assessment framework on the compliance for taxpayers in the entertainment industry.
Determinants of tax compliance by public transport savings and credit cooperative societies in Kenya:
(KESRA/JKUAT - Unpublished research project, 2019) Muraya, Lilian Wakarima
Tax is the main source of revenue in Kenya. Money incurred from taxation is used to provide public services and goods to the citizens. Indeed, taxation in the informal business sector including SMEs and public transport continue to face serious issues. This research project is aimed at studying the determinants of tax compliance by public transport savings and credit cooperative societies in Kenya. A cross sectional descriptive research design was agreed and population was made of 37 public transport Sacco’s in Nyeri County hence a census of the 37 office administrators of the public transport SACCO’s in Nyeri town was pursued and a questionnaire used for data collection. The questionnaires were administered to the office administrators by the researcher and there after collected after one week. The collected data was summarized using descriptive statistical tools comprising the mean and frequencies and the binary logistic regression used to examine the association between the tax compliance determinants and tax compliance by public transport SACCO’s. The study revealed that deterrence sanctions positively (B = 0.354) and significantly (P-value 0.001<0.05) affected public transport SACCOs tax compliance while taxpayers’ perception positively (B = 0.525) and insignificantly (P-value 0.503>0.05) affected public transport SACCOs in Nyeri County tax compliance. The study also revealed that tax knowledge had significantly (P-value 0.001<0.05) and positively (B = 1.016) affected tax compliance by public transport SACCOs in Nyeri County. Finally, the findings show a negative (B = -1.213) and significant (P-value 0.001<0.05) relationship between tax compliance costs and tax compliance by public transport SACCOs in Nyeri County. The multiple logistic regression results established that deterrence sanctions had a positive (B = 0.438) and significant (P value = 0.001<0.05) effect on tax compliance by public transport SACCOs while taxpayers’ perception had a positive (B = 0.348) but an insignificant (P value = 0.660>0.05) relationship with tax compliance by public transport SACCOs. The study also revealed that tax knowledge had a significant (P value = 0.009<0.05) and positive (B=1.464) effect on tax compliance by public transport SACCOs. The results further established a negative (B=-1.524) and significant (P value = 0.004<0.05) relationship between tax compliance costs and tax compliance by public transport SACCOs in Nyeri County. The results led to the conclusion that noncompliance sanctions, knowledge in taxation and costs associated with compliance mostly affected tax compliance by public transport SACCOs in Nyeri County. The study suggested that severe fines and penalties should be imposed on non-complaint public transport SACCOs and frequent tax audits should be carried out by the Kenyan tax authority. The study also suggest that KRA should ensure transparency and accountability during collection of taxes and that KRA should carry out tax training programs among public transport SACCOs to enhance tax knowledge and awareness as this would motivate SACCOs pay taxes and file tax returns.
Determinants of Tax Compliance in the informal sector in Kenya : A case study of Small and Meduim Enterprises in Machakos County
(KESRA/JKUAT - Unpublished research project, 2020) Cherop, Janet
The aim of this study was to assess determinants of tax compliance in the informal sector in Kenya. This research will investigate the level of tax compliance in the informal sector with a focus on SMEs in Machakos County. The study was guided by the following objectives: to determine how tax Awareness on the tax compliance in the informal sector in Kenya; to assess the effect of Tax Rate on the tax compliance in the informal sector in Kenya and finally to establish the effect of Compliance Cost on the tax compliance in the informal sector in Kenya. This study was based on the following theories; Allingham and Sandom Model, Pecking Order Theory and finally Institutional Anomie Theory. The study adopted a descriptive research design. The study had a target population of 1,680 SMEs. The study adopted a stratified random sampling technique to select 10% of the target population as the sample size. Questionnaires were used as the research instrument to gather the relevant information. Primary data was used for the purpose of this study. The data was collected using semi structured questionnaires containing closed ended questions. The study was carried out a pilot test to test the validity and reliability of the questionnaires in gathering the data required for purposes of the study. The researcher edited the completed questionnaires for completeness and consistency. Regarding Tax Awareness, the study concluded that Awareness had a positive but significant effect on the tax compliance in the informal sector in Kenya. The study also concluded that Tax Rates had a negative but significant effect on the tax compliance in the informal sector in Kenya. The study further concluded that Compliance Cost had a positive but significant effect on the tax compliance in the informal sector in Kenya. The study recommends that Kenyan tax authorities needs to take an active role in enabling the capacity of traders in the informal sector in areas of training so that they can be equipped with basic Tax Knowledge. The study also recommends that tax rates should be reviewed for those in the informal sector to ensure that they commensurate with economic conditions. The study finally recommends that the Kenyan tax authorities should come up with policies to reduce tax compliance cost to ensure that they do not affect the growth of traders in the informal sector and encourages traders in the informal sector to comply with taxes.
Determinants of turnover compliance among small scale enterprises in Kilifi County
(KESRA/JKUAT - Unpublished research project, 2020) Kalama, Alex Nguma
The small business taxpayers who do not qualify for VAT pay the turnover tax. This tax was aimed at bringing businesses in the informal sector into the tax bracket. These businesses include small scale manufacturing firms and Jua Kali businesses, agricultural enterprises and transport industries. The general objective of the study was to investigate the determinants of turnover tax compliance among small scale enterprises in Kilifi County. The study focused on the following variables; taxation knowledge, tax compliance cost and taxpayer perception. The study was guided by the following theories; Fischer tax compliance model, the Allingham and Sandmo theory and Theory of planned behavior. This study adopted stratified sampling technique which was seen to be viable and more accurate given the target population. The target population comprised of 252 registered SSEs in Kilifi County from different sectors in Kilifi County. A pilot study was undertaken on 10 of the respondents to test the reliability and validity of the questionnaire. Primary data was collected using questionnaires. Quantitative data was analyzed using SPSS version 25. Descriptive analysis measures such as frequency, percentage, mean and standard deviation was used in data interpretation. Regression analysis was used to examine the effects of the independent variables; taxation knowledge, tax compliance cost and taxpayer perception and turnover tax compliance (the dependent variable). The R2 analysis was used to measure the goodness of fit of the model being assessed. Correlation analysis was used to determine the strength of relationship between the variables. The study found out that there was a positive and significant relationship between taxation knowledge and turnover tax compliance. Further, the study found out that there was a positive and significant relationship between tax compliance cost and turnover tax compliance. Lastly, the study found out that there was a positive and significant relationship between taxpayer perception and turnover tax compliance. Based on the findings, the study concluded that taxation knowledge, tax compliance cost and taxpayer perception have a positive and significant effect on turnover tax compliance. The study recommends that continuous tax education programmes and effective monitoring mechanisms must be taken into account by tax authorities to ascertain that taxpayers have a good and reasonable knowledge and understanding of tax matters. Further, in response to tax compliance costs, the government should endeavor to implement tax policies in the form of concessions that produce favorable outcomes for the SSEs. Lastly, there is need for a more simplified tax system since this will increase the perception of fairness on tax system and ultimately fosters tax compliance.
Determinants of turnover tax compliance among micro and small enterprises in Gikomba, Market, Kenya
(KESRA/JKUAT - Unpublished research project, 2020) Mugoma, William Ochieng
In view of the limited tax contribution of the small and micro enterprises in Kenya, this research endeavors to understand the specific influence of three variables on turnover tax compliance among this group of taxpayers. These variables include taxpayer’s awareness, enforcement measures and the cost of compliance. The research seeks to answer three research questions aimed at delivering on three objectives which include understanding the influence of taxpayers’ awareness, enforcement measures and the cost of compliance respectively on turnover tax compliance among the small and micro enterprises in Gikomba market. The study was guided by three theories namely: contract theory,Economic deterrence theory of tax compliance and transaction cost economic theory. The study targeted MSEs in Gikomba market and applied random sampling to select 517 respondents and study adopted a descriptive research design. This study used both secondary and primary data. Primary data was acquired using structured questionnaires with closed questions and secondary data was acquired from existing revenue publications and reports. The study analysed the data by the use of both descriptive and inferential statistics. The inferential statistics included the use multiple regression, ANOVA and correlation analysis. Data was analyze with finding that independent variable correlate with dependent variable up to 70.6% (R=0.706) and accounts for a variation of 49.8% (𝑅2 =0.498). F statistics value of 23.375 with a significance level of 0.000 which was less than 0.05 significance level and it implies independent variables and dependent variable is statistically significant. The Regression equation shows that the independent variables and dependent variable were statistically significant with p-value of 0.000, 0.002 and 0.000 respectively. A unit change in taxpayer awareness, enforcement measures and cost of compliance increase turnover tax compliance by 0.413, 0.348 and 0.292 respectively. The study findings indicated that taxpayer awareness, enforcement measures and cost of compliance signficantly affects turnover tax compliance. The study concluded that there is need for Kenya revenue authority frequently organizes for taxpayers Workshops to educate taxpayers on tax laws related to MSEs. The study recommends that KRA should regularly have Some MSEs KRA PIN Deactivated due to compliance related offenses. Future studies may be conducted on the influence of turnover tax non-compliance among all the registered businesses in Kenya.
Determinants of Turnover Tax Compliance Among Small and Medium Enterprises Sector in Kenya
(KESRA/JKUAT - Unpublished research project, 2022-09-01) OKUKU, DANIEL
Tax being the key source of revenue that enable government accomplish its mandate to the citizen, low tax compliance among the ever-expanding potential small businesses sector is perceived to be contributing to the perpetual tax revenue performance short of target. The objective of the was evaluate the determinants of tax compliance in the case of small and medium enterprises taxpayers’ sector. Thereby, identify areas of strength and weakness and making recommendation for improving areas of weakness. The main determinants that were studied include; Tax penalties and Fines, automation tax processes and taxpayer education. The Economic Deterrence theory, Fiscal exchange Theory and Prospect theory are the theoretical framework that guided the study. The study adopted explanatory research design. The sample size from the target population computed through stratified random sampling was 234 owners of SMEs in Embu Town from which 192 participants responded. Data collected was subjected to descriptive, correlation and multiple regression analyses. The results of multiple regression analysis indicated that Penalties and Fines positively and significantly influenced Tax Compliance (β1=0.263, p=0.000<0.05); Automation of Tax Processes positively and significantly influenced Tax Compliance (β2=0.293, p=0.000<0.05); Taxpayer Education positively and significantly influenced Tax Compliance of SME’S in Embu County (β3=0.260, p=0.000<0.05). From the findings, the study recommends that KRA should enhance penalties and fines, automation of tax processes and taxpayer education so as realize tax compliance of Small and medium enterprises in Embu County. The study suggest that future studies can evaluate other factors that affect tax compliance among Small informal enterprises in Embu County
Determinants of value added tax collection in Kenya. a case study of Kasarani constituency
(KESRA/JKUAT - Unpublished research project, 2019) Kasero, Alice Soila
The study aim to establish the factors affecting Value added tax compliance in among Small and medium enterprises in Kasarani Constituency. 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 Kasarani Constituency, to find out the effect of penalties and interest on Value added tax compliance in among Small and medium enterprises in Kasarani Constituency, to determine the effect of level of tax knowledge on Value added tax compliance in among Small and medium enterprises in Kasarani Constituency to assess the effect of rates of tax on Value added tax compliance in among Small and medium enterprises in Kasarani Constituency. The study adopted descriptive research design. The study target population was 1600 Small and Medium taxpayers in Kasarani Constituency. The study sample size was 160. 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 Value added tax compliance