Influence of withholding value added tax knowledge on tax compliance in Kenya: a case of Nairobi County
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Date
2019
Authors
Waweru, Esther Wanjiru
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Much of the literature has focused on withholding VAT and how its influences compliance but failed to establish the role played by VAT withholding knowledge on compliance. There is currently unresolved debate with two views on whether knowledge of withholding VAT would increase or decrease tax compliance among the tax payers. Kenya is rated among countries with low rate of tax compliance around the world. The low rate of compliance has largely been evidenced by failure of the Kenya Revenue Authority to meet revenue collection targets. The main objective of the study was to establish the influence of withholding value added tax knowledge on tax compliance in Nairobi City County. The study was guided by the following specific objectives; to explore the influence of knowledge of submission of withholding VAT returns on Tax Compliance in Nairobi County, to understand how knowledge of refund of excess credit influences Tax Compliance in Nairobi County and to underline the effect of knowledge of the penalties & interests under withholding VAT system on Tax Compliance in Nairobi County. The study adopted a descriptive research design. The population of the study comprised of 1850 VAT withholding tax agents. The study used stratified random sampling technique where 328 respondents formed the sample size. Primary data was gathered with the help of questionnaires. The collected data was entered into Statistical Package for Social Sciences for analysis. Descriptive statistics like means and standard deviations and inferential statistics like regression analysis were used in analysis. The findings were presented in form of tables and figures. The study established that knowledge of penalties and interest under withholding VAT, knowledge of refund of excess credit and knowledge of submission of withholding VAT all have postive and significant effect on tax compliance. The study concludes that withholding VAT knowledge has postive and significant effect on tax compliance. The study recommends that the Kenya Revenue Authority should put in place education programs that aim at increasing knowledge of submission of withholding VAT returns which may result into increased compliance. More SMEs should get registered for the purpose of VAT so that they gain from excess credit that is refunded by the Kenya Revenue Authority. KRA should create more awareness of the interests and penalties that may accrue to tax payers for failing to withhold VAT or pay the withheld amount.
Description
Keywords
Tax Compliance, Withholding Value, Excess credit