Effect of tax audit on tax compliance among large taxpayers in Kenya
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Date
2019
Authors
Kimani, Florence Wambui
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Tax audit is important because it assist the government in collecting appropriate tax revenue
necessary for budget, to ensure strict compliance with tax laws by tax payers and to improve
the degree of voluntary compliance by tax payers and to ensure that the amount due is
collected and remitted to government. The general objective of the study was to investigate
the effect of tax audit on tax compliance of companies in Kenya. The specific objectives of
the study was to examine the effect of desk tax audit on tax compliance among large tax
payers in Kenya; to determine the impact of field tax audit on tax compliance among large
tax payers in Kenya; and to find out the impact of a mix of desk and field tax audit on tax
compliance among large tax payers in Kenya. The study adopted descriptive research design.
The population for the research was all staff working in tax audits and taxation of large
taxpayers in Kenya. The target population of the study will therefore be 263 staff working in
customs, domestic tax department and corporate support services departments in Kenya
Revenue Authority. The study used stratified random sampling was used to select 158
individuals from the target population. The study used primary data, which was collected by
use of structured questionnaires. A pilot test was conducted to examine and enhance the
validity and reliability of the research instrument. The close-ended questions provide
quantitative data whose analysis was done with the help of statistical package for social
sciences (SPSS version 22). Descriptive statistics that will be used include standard
deviation, mean, percentages and frequency distribution. For ease of comparison, graphs and
tables was used to present the results. Regression model and correlation analysis was used to
deduce the association between the variables of study. The study found that desk tax audit
has a positive and significant effect on tax compliance among the large tax payers in Kenya.
The study also found that field tax audit has a positive and significant effect on tax
compliance among large tax payers in Kenya. The study also established that a mix of both
desk and field tax has a positive and significant effect on tax compliance among large tax
payers in Kenya. The study concludes that desk tax audit had the most significant effect on
tax compliance among the large tax payers in Kenya, followed by field tax audit and a mix of
desk and field tax audit. The study recommends an increase in the utilization of desk tax
audit in Kenya Revenue Authority to improve tax compliance. This can be done by
increasing the number of staff and improving training for the staff conducting desk tax audit.
In addition, the management of Kenya Revenue Authority should enhance the use of field tax
audit by providing the required resources including transport and computers to enable staff to
go for field visits. Further, Kenya Revenue Authority should enhance the mix of desk and
field tax audit so as to improve tax compliance. The use mix of desk and field tax audit helps
in complementing the advantages of each.
Description
Keywords
Tax compliance, Audit, Information