Effect of tax administration on compliance among small and medium sized enterprises in Kiambu County
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Date
01-11-20
Authors
Wachira, Stephen Kamau
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Low levels of tax compliance are observed among SMEs thus reducing potential tax collections and increasing the tax administration effort. Many countries address these issues by adopting simplified tax regimes for SMEs and implementing dedicated compliance strategies. The general objective of the study was to determine the effect of tax administration on tax compliance among small and medium sized enterprises in Kiambu County. The study was guided by the following variables; deterrence tax measure, electronic taxation system and tax education. The study was anchored on three theories; The Deterrence Theory of Tax Compliance, Theory of Planned Behavior and Adams Smith Canons of Taxation Theory. The target population comprised of 247 registered businesses in Kiambu County as at 31st December, 2019. This study adopted cross sectional survey design. Stratified random sampling method was used to select relevant respondents. Questionnaires were used to collect primary data from respondents. Secondary data was obtained from related materials in tax management journals. Quantitative data was analyzed using SPSS version 25. Descriptive statistics and multiple regression analysis was used to predict the effect of deterrence tax measures, electronic taxation system and tax education on tax compliance. A pilot study was undertaken on 15 of the respondents to test the reliability and validity of the questionnaire. The study found out that there was a positive and significant relationship between deterrence tax measures and tax compliance. Further, the results revealed that there was a positive and significant relationship between electronic taxation system and tax compliance. Lastly, there was a positive and significant relationship between tax education and tax compliance. Based on the findings, the study concluded that deterrence tax measures, electronic taxation system and electronic taxation system have a positive and significant effect on tax compliance. Based on the findings, the study concluded that deterrence tax measures, electronic taxation system, electronic taxation system have a positive and significant effect on tax compliance. The study recommends that the sanctions and penalties should be levied promptly once a liability has been established; should not be excessive; should, however, be higher than the prevailing market interest rates. KRA should offer continuous training to taxpayers on how to use the various IT platforms like iTax, EGMS, Mobile Apps and Electronic Stamps in their organizations to improve excise duty compliance. Lastly, there should be training of special units within the revenue departments; for providing education, counseling and support to the taxpayers, through different media which include newspapers, television, radio programs, websites, seminars and front desk help, these create more room to disseminate key information to the taxpayer.
Description
Unpublished Research Project
Keywords
SME, Compliance