Factors Influencing Turnover Tax Compliance in Kenya; Case of Embu County
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Date
2018
Authors
Waweru, Thiong’o Arthur
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Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Taxation is the avenue through which persons both corporate and individuals contribute towards revenues of their country or tax jurisdictions they operate in. On the other hand, taxation is the most important avenue through which governments generate revenue necessary for development projects and recurrent expenditure. The objective of this study was to find out the factors influencing turnover tax compliance in Kenya. The researcher outlined a detailed literature review and identified the variables for this research to be taxpayers level of awareness, taxpayer’s perception towards the government and tax system, and costs of compliance. A target population of 200 turnover taxpayers located in Embu town was identified. A sample of 132 taxpayers was picked as representative to be the focus of this study. A descriptive survey design was used. Stratified sampling technique was used to create a sampling frame ensuring that different and diverse types of entities were included in the survey. Data was collected using self–administered questionnaires and an interview guide. The collected data was analyzed using Statistical Package for Social Scientist software (SPSS) and findings presented using tables. The Findings from the study reveal that all the identified factors have a direct influence on the tax compliance efforts by taxpayers in the turnover businesses. The perceptions of taxpayers towards the tax system greatly determine the level of compliance for turnover tax. The findings suggest that taxpayers are not aware of their responsibilities; however, the result also indicated that other factors like cost of compliance and complicated systems result into the low levels of compliance. Taxpayer’s perception of tax system is inclined to change due to changing tax knowledge. This suggests that increased tax knowledge may have significant impact on perception of tax system. The recommendations of the study are; There should be a deeper analysis of the mode of turnover tax collection to make it less time consuming and less tedious. The problems that turnover tax taxpayers experience when filing turnover tax returns should be established and necessary adjustment remedies made. There should be rigorous education programs targeting SMEs to enable them understand the turnover tax system, how it works and advantages of using it so that they can understand and appreciate it, understand obligations and provide opportunity to provide feedback about the way the tax system was run. They should also train their staff diligently on customer service so that when these taxpayers who have limited knowledge on taxes approach them they can be able to help them and train them on the application of turnover tax.
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Keywords
Turnover Tax