Factors affecting tax compliance in the informal sector in Nairobi; case of Nairobi central business district
Loading...
Files
Date
2018
Authors
Gogo, Pamella
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
This study sought to determine the factors affecting tax compliance in the informal sector in Nairobi. To achieve this, central business district of Nairobi was taken as a case study. In previous years’ revenue targets set by treasury are never met. Therefore, the actual revenue collected has always been behind the targets. This is as a result of tax noncompliance. Tax non-compliance may be measured in terms of the tax gap. It is very clear that there has been tax gaps every fiscal year. Therefore, the researcher opted to carry out this study to determine factors affecting tax compliance in the informal sector and recommend measures to be put in place by the government and Kenya Revenue Authority to enhance tax compliance in this sector. The main objectives of this study was to establish tax information on tax rates, tax penalties and fines and tax compliance cost on tax compliance level. This has been considered by the researcher to be the most key factors that affect tax compliance level in Kenya. This study was controlled by two theories, that is theory of partnership and theory of Allingham and Sandmo. The study used questionnaires and oral interview method to collect data. The population of the study was a number of 265 informal sector in central business district of Nairobi and a sample of 53 enterprises. Once the data was collected, it was coded and analyzed with the help of the SPSS. Mean, frequencies, and percentages were calculated. It was presented in tables, charts using simple percentages. correlation analysis was done in order to make a thorough conclusion on factors affecting compliance with tax laws in Kenya. It was clear from the findings that tax information is the greatest contributing factor in tax compliance. According to the study findings there is enough proof to conclude that low tax knowledge and education are associated with high levels of tax compliance. Their (KRA) main objective should be to offer tax information advices for free. Some of the key services that they should be offering that are in great need are; tax computation, filing of tax returns, which tax to be paid where, tax penalties and the due dates. This will not only help tax payers but also tax practitioners. KRA should also formally communicate tax information changes. KRA should ensure that there is no tax payer who doesn’t pay tax or file tax returns due to failure of tax understanding.
Description
Keywords
Tax Compliance