Determinants of Residential Monthly Rental Income Tax Compliance among Landlords in Masii Town in Machakos County, Kenya
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Date
2022
Authors
Kasiva, Elizabeth
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Abstract
In Kenya, tax compliance is still low despite the use of adverse measures such as; penalties,
armed monitoring, routine audits and fines. This has been attributed to the fact that there is
still deemed to be a lack of proper mechanisms to impose tax collection and ease of tax
calculation for all tax payers. The study aimed to determine factors that influence residential
monthly rental income tax compliance among landlords in Masii Town in Machakos County.
The study was guided by three research objectives: To examine the effect technology on
residential monthly rental income tax compliance among landlords in Masii Town in
Machakos County; To establish the effect of tax payers knowledge on residential monthly
rental income tax compliance among landlords in Masii Town in Machakos County; To
determine the effect of compliance costs on residential monthly rental income tax compliance
among landlords in Masii Town in Machakos County. The study was guided by three theories
namely: Economic Deterrence Theory, Diffusion of Innovation (DOI) Theory and Fiscal
Exchange theory. The target population was 255 respondents and Sample size of 155
respondents with response rate of 85%. Data was collected from a primary source.A
Questionnaire was used to collect the primary data while Data analyzed included both
descriptive and inferential statistics. The study findings indicated that technology, taxpayer
knowledge and compliance cost signficantly affects residential monthly rental income tax
compliance with p value of 0.001, 0.002 and 0.000 respectively which is less than 0.05. The
model summary showed that a unit change in technology increases residential rental income
tax compliance by 0.316,a unit change in taxpayer knowledge increases residential rental
income tax compliance by 0.239 and a unit change in cost of compliance decreases
residential rental income tax compliance by -0.383.Finally, the summary of the findings
reveal that technology and taxpayer knowledge positively affects residential monthly rental
income tax compliance while compliance costs negatively affect residential monthly rental
income tax compliance.The study results reveal that the use of I-tax has saved respondents
time while filing taxes and taxpayers find filling returns online on a monthly basis to be an
easy process due to internet access .Technology is used to increase tax administration
efficiency, increase taxpayer services and boost tax compliance. Findings on knowledge
showed that having knowledge and understanding of tax regulation helps taxpayers know the
importance of declaring their taxes, dates of making payment, where and how to make tax
payment. Cost remains a challenge as taxpayers incur cost such as; getting and organizing
information, record keeping, employing tax experts, buying stationaries and materials that
will be used during filing and time spent calculating and filing taxes. Based on the findings,
the study recommends that KRA, the government and tax practitioners should formulate
policies that emphasize leverage on technology to enhance collection of tax revenue.
Furthermore, cost reduction mechanisms should also be adopted to enable taxpayers to
comply at minimum costs. Therefore, future studies should be carried out to examine the
effect of stakeholder sensitization on residential monthly rental income tax compliance
Description
Post Graduate Diploma in Tax Administration