Factors influencing utilization of Electronic Tax Register by Small Medium Enterprises in Nairobi Central Business District
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Date
2019
Authors
Ochieng, Beryl Adhiambo
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
In Kenya, benefits of automation include a reduction of fraud, remote access to information, improved collection statistics, and uniform application of tax legislation. However, use of ETR in processing tax returns has been met with mixed reactions, resistance and perceptions while KRA believes it has increased efficiency in operations and revenue collection. In view of this, the primary goal of this study was to analyse the factors influencing utilization of electronic tax register by Small Medium Enterprises in Nairobi CBD. The study was guided by the following specific objectives: to establish the effect of knowledge of electronic tax system operation on its utilization by Small Medium Enterprises, to determine the effect of cost incurred on the utilization of electronic tax register by Small Medium Enterprises, and to establish the extent to which user perceptions affects utilization of electronic tax register by Small Medium Enterprises. This study was guided by the systems theory, technology determinism theory and the ability to pay theory managers/owners. The study adopted descriptive research design. The study population was 7,719 SMEs in Nairobi. Simple random sampling technique was used to select the sample. The sample size of this study was based on Yamane„s 1967 formulae to get a sample of 380 respondents. This study used primary data that was collected through questionnaires. To determine the reliability of research instruments a pilot study was conducted before the actual data collection and further split half method was carried out to calculate Cronbach alpha. A value of above 0.7 confirmed the reliability of the research instruments. The data was analyzed using both inferential (multiple regression and correlation) and descriptive statistics (frequencies, percentages, mean and standard deviation) and was presented by use of tables. The study findings indicated that knowledge of electronic tax system operation (β = 0.103; ρ < 0.05), cost incurred (β = 0.393; ρ < 0.05) and user perceptions (β = 0.328; ρ < 0.05) had significant relationship with utilization of electronic tax register by Small Medium Enterprises. Therefore, it is recommended that the government should ensure proper training of entrepreneurs on the utilization of ETR machines, small and medium sized enterprises within the VAT threshold use ETRs in their operations, review the compliance costs to ensure more SMEs access VAT tax services, provide free and cheaper ETRs to SMEs. Lastly, there should be regular SME training and capacity building on ETR technical skills, systems and processes
Description
PROJ 336.2 OCH
Keywords
ETR, Electronic Tax Register, Tax Compliance