Factors influencing presumptive tax compliance among small and micro enterprises in Kenya: a case of Nyeri County.
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Date
2019
Authors
Kiama, Susan Wangui
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Tax is the most essential source of government revenue because it is very predictable when done correctly and in accordance to the governing laws. In an effort to maintain tax as the main source Kenya revenue, the government continually comes up with creative and relevant ways to increase tax collection such as; tightening tax valuation processes, developing tax policies and reforms, creating awareness on the role of taxation among others. Therefore, the specific objective of this study is to determine the factors that influence Presumptive tax compliance among SMEs specifically in Nyeri County. In the literature review, the researcher outlined the relevant theories that relate to tax compliance as well as identified the independent variables as tax knowledge, tax compliance costs, tax rate, and Presumptive tax system while the dependent variable being the Presumptive tax compliance of SMEs. The research design used in the research methodology was descriptive survey design. A sample size of 379 was picked to show maximum representativeness of study target population. In order to include various diverse categories of taxpayers and business entities in the research, stratified sampling technique was adopted. Data was collected using closed ended questionnaires and an interview guide for one on one interview. The collected data wasbroken down and analysed using the Descriptive and Inferential Statistics tools like Regression and Correlations analysis models which were all supported by the SPSS statistics software. The research findings were that tax knowledge and awareness of the presumptive system had positive influence while tax rates and tax compliance costs had a negative influence to the Presumptive tax compliance of SMEs. The research identified that tax information was readily available and easy to understand but more sensitization forums needed to be introduced for SMEs to be more tax compliant. The research also identified that the SMEs viewed tax compliance as time consuming and that the tax agents should revise their currents tax structures as well as embark on sensitizing SMEs on how to be tax compliant at minimal costs. The research also identified that the tax rates were viewed as being unfavourable and that the penalties for noncompliance were considered unfair hence they should be revised so as to make them more attractive and favourable. The research also identified a negative relationship between the tax rates and tax compliance costs with Presumptive tax compliance since the respondents felted that the current tax rates are too high and that it was very expensive to comply to the tax jurisdiction. Hence, the study concluded that the Presumptive tax system should be revised and tax agents should engage SMEs in more tax related forums to understanding and recommend ways to improve tax compliance in the informal sector. The research recommended that tax rates should be revised to be more favourable and that tax information on Presumptive tax should be simplified and made more available through sensitization forums by KRA and well as other modes.
Description
PROJ 343.73 WAN
Keywords
Tax Compliance, SMEs enterprises