Factors affecting capital gain tax administration among taxpayers in Kilifi County
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Date
2019
Authors
Kiplangat, Kelvin
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
Globally many countries depend on taxes as a nuclear of revenue generation for economic development and growth. Capital Gain Tax (CGT) refers to the tax chargeable on the gains that accrue to an individual or a company on the transfer of property situated in Kenya. The capital gain tax was first introduced in Kenya in the year 1975. However, in the year 1985, the tax was suspended.The Kenya Finance Act 2014 re-introduced a 5% Capital Gains Tax in Kenya, a move geared towards generating revenue. This tax system has encountered rigid resistance from investors and lawyers among others. Those parties differing with the capital gain taxes talk of its negative impacts to the investors and the overall Kenyan economy. There is need to shed more light on the factors affecting capital gain tax administration. The current study sought to find out the factors affecting capital gain tax administration among taxpayers in Kilifi County. This study was anchored on three theories namely; Lock – in effect theory, Gordon-Li Model and Economic Deterrence Theory; and aimed at achieving the following specific objectives; To examine the effect of switching costs on capital gains tax administration among taxpayers in Kilifi County; To determine the effect of tax knowledge on capital gains tax administration among taxpayers in Kilifi County; and to establish the effect of compliance costs on administration of capital gains tax among taxpayers in Kilifi County. The research used a cross-sectional survey design with a target population consists of 547 taxpayers with the capital gains tax obligation in Kilifi County, with a sample of 164 taxpayers being drawn from the list of taxpayers. Data from the respondents was collected using a questionnaire and analysis undertaken using SPSS v22. Multiple regressions served as the test and metric of the relationship existing between the dependent and independent variable. The research established that switching costs, tax knowledge and compliance costs are positively related, .535 .474, .591, with the capital gains tax administration. The analysis on multiple regressions indicated that the predictor variables chosen for the research were sufficient. Moreover, there is positive influence of the predictor variables on the dependent variable capital gains tax administration. Subsequently, the predictor variables of Switching costs, Tax Knowledge and Compliance costs influenced the Capital gains administration within Kilifi County. The study recommends a reduction in compliance costs and enhancement of tax education campaigns by KRA to grow knowledge among taxpayers.
Description
REF PROJ 336.2 KIP
Keywords
Tax knowledge, Switching costs, Compliance costs