Effect of electronic tax filing system on tax compliance by small and medium enterprises in Eldoret town.
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Date
2019
Authors
Sakhasia, Phanice Nafuna
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Low tax compliance by small and medium sized enterprises is a challenge for policy makers in many developing nations including Kenya. To address this problem, tax authorities introduced electronic tax filing systems. Therefore, the purpose of this study was to assess the effect of electronic tax filing system on tax compliances by SMEs in Eldoret town, Kenya. The following were the specific objectives of the study: to find the effect of iTAX training and support on tax compliance by SMEs, to establish the effect of iTAX cost of filling on TAX compliance by SMEs, to determine the effect of iTAX awareness on compliance by SMEs and to establish the effect of iTAX system quality on tax compliance by SMEs in Eldoret town. The study utilised a descriptive survey to target 365 SMEs in Eldoret town. A sample size of 191 SMEs was selected through stratified random sampling method. The research collected data through use of questionnaire. The data collected was analysed using descriptive and inferential statistics. All ethical considerations were followed. The study found out that there existed positive effect of iTAX use based on the following constructs; iTAX training and support (r=0.285), iTAX awareness (r=0.583) and iTAX systems quality (r=0.550) on compliance levels by SMEs in Eldoret town. All the three constructs effect were significant at 95% confidence level as revealed by correlation statistics. However, costs associated with iTAX use was found to have negative relationship (r=-0.015) which was not significant (p>0.05) with tax compliance by SMEs. In conclusions, the study observed that there existed a significant positive effect (p<0.05) between electronic tax filing system and tax compliance by small and medium enterprises in Eldoret town. The study recommends that regular training need to be conducted to cover the half that said they had not received any training on iTAX from KRA. To ensure SMEs understand the operations of iTAX, there is need for product of guides through brochures and pamphlets. On their part, KRA needs to ensure that iTAX system capacity is strengthened and regular system maintenance is done to ensure efficiency and effectiveness of taxation activities.
Description
PROJ 343.73 SAK
Keywords
Internal Revenue Service, Tax Compliance, SMEs enterprises