Factors affecting tax compliance among micro and small enterprises in Mombasa County.
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Date
2019
Authors
Chege, Simon ; Mumia Benn MINCU, CPA.K
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
The objectives of tax authorities may be constant – optimizing collections under the law and increasing levels of voluntary compliance and in the process instill confidence in the community that the tax system and its administration are fair – but the means to achieving it are not. This study sought to identify the factors affecting tax compliance among micro and small enterprises in Mombasa County. Micro, small and medium enterprises represent a high-risk group in most countries because they are numerous and because their income is neither fixed nor, in most cases, capable of easy verification against third party data. In addition, their commercial set-ups can lack the welldeveloped structures for record keeping, independent audit of accounts and cash handling that help to minimize risks of under-reporting in larger businesses. The objectives of the study were: to examine the effect of taxpayer education on tax compliance among micro and small enterprises in Mombasa county; to examine the effect of technological advances on tax compliance among micro and small enterprises in Mombasa county; and to examine the effect of tax compliance costs on tax compliance among micro and small enterprises in Mombasa county. The target population was the licensed micro and small enterprises in Mombasa County. Proportional stratified random sampling technique was used to select a sample of 396 respondents. Data was collected using structured questionnaires administered through drop and pick method. The collected data was cleaned, coded, entered and analyzed using SPSS version 22. Descriptive statistics for all variables were presented using figures and tables. Means and standard deviation were used to describe the variables in the study, while correlation and regression analysis was conducted to determine the relationship and effect of the independent variables on tax compliance. The study findings revealed that taxpayer education, technological advances and tax compliance costs have positive and significant effect on tax compliance individually with t=6.226; p=.000; t=7.687; p=.000 and t=4.957; p=.000 respectively, and collectively with Rsquare value of 0.680. The study recommended that Kenya Revenue Authority should continually carry out tax education to mobilize more citizens to pay taxes and support domestic resource mobilization; that Kenya Revenue Authority should put up mechanism to pay taxes on installments to reduce businesses from borrowing to pay taxes; that Kenya Revenue Authority should design education programs that focus on raising public awareness of new tax laws and methods of filing as well as answering public inquiries; and finally, the government in conjunction with the revenue authority should foster an overall culture of tax compliance that is based on rights and responsibilities in which citizens see paying taxes as an integral part of their relationship with the government.
Description
PROJ 343.73 CHE
Keywords
Tax Compliance, Taxpayer Education, Small enterprises, SMEs