Determinants of turnover tax compliance among micro and small enterprises in Gikomba, Market, Kenya
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Date
2020
Authors
Mugoma, William Ochieng
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Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
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.
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Project
Keywords
Turnover Tax Compliance, Taxpayer Awareness, Enforcement measures