Factors influencing tax compliance among sole proprietors: a case of Embakasi south constituency in Nairobi city county, Kenya
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Date
2019
Authors
Mutisya, Francis M.
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Global trends in tax compliance among self-employed individuals shows a low trend. In Kenya, the situation is similar in that there is a wide gap between tax compliance from small ventures in comparison to large taxpayers. Whilst the studies on tax compliance in Kenya are voluminous, few have focused on sole proprietors. At the overall, this studyendeavored to establish the factors influencing tax compliance among sole proprietors, a case of Embakasi South Constituency in Nairobi City County, Kenya. Specifically, three variables were tested, that is, penalties and interests, book keeping, and costs of compliance. The ability to pay theory, optimal taxation theory and economic deterrence theory presents a good theoretical underpinning of this study.This study used descriptive research design since this type of design suits the purpose of the study. A descriptive technique shows how variables interconnects. All the sole proprietors at the East of Nairobi Tax Service Office formed the target population for this study. The sampling frame composed of all 147 sole proprietors whose annual Value Added Tax payments was more than Kshs. 400, 000 in the year 2018/2019. The sample size for this study was 107 sole proprietors in East of Nairobi Tax District. The 107 sole proprietors were selected using simple random technique. A questionnaire was used to source data from the sole traders in the study site. The questionnaires had close ended questions. This study used descriptive statistics and regression analysis. Data analysis was done using SPSS. Presentation of findings was done using charts and in tabular forms. The study obtained a response rate of 71 %. Results indicated that penalties and interest and book-keeping positively and significantly influenced tax compliance among sole proprietors in Embakasi South constituency. On the hand, cost of compliance had a negative and significant bearing on tax obedience. The study recommended that penalties and interests with regard to tax defaults and tax evasions need to be retained when tax reforms are being done by the National Treasury of the government of Kenya. Also, Kenya Revenue Authority needs to sensitize sole proprietors on the value of book keeping as it fosters tax compliance and also simplify tax filing process as it was revealed that cost of compliance negatively influenced tax compliance.
Description
PROJ 343.73 MUT
Keywords
Cost of compliance, Sole proprietors, Tax Compliance