Factors Affecting Turnover Tax Compliance among Micro and Small Enterprises in Kitui Municipality, Kenya.
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Date
2022
Authors
Kaanzo, Esther
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Abstract
The current study sought to establish the factors affecting turnover tax compliance among
micro and small enterprises in Kenya, a case of registered juakali artisans in Kitui
Municipality, Kitui County. More specifically, the study aimed at determining effect of tax
education, integrated tax system and enforcement measures on turnover tax compliance
among Juakali Artisans in Kitui Municipality. The study was based on three theories, which
include Social contract theory, Economic deterrence theory and theory of technological
determinism. The study adopted descriptive research design. The target population of the
study was 407 juakali artisans in kitui municipality. The study sample size was 202
respondents selected from a target population using stratified random sampling. This study
adopted primary data collected through questionnaires. A pre-test on a different sample was
carried out to give a Cronbach’s alpha greater than 0.7 for all the variables as a rule of
thumb. Data analysis was carried out by use of descriptive statistics and inferential statistics
using standard statistical techniques including Pearson correlation coefficient and
regression analysis. The descriptive results showed that Kenya Revenue Authority do not
organizes for taxpayers Workshops frequently to educate taxpayers on tax laws related to
Juakali Artisans in Kitui Municipality. Also, the descriptive analysis showed that the
enforcement measures used by enforcement officers are coercive rather than persuasive.
Further, the results indicated that the need for frequent online submission of turnover tax
by the micro and small enterprises has not helped them in improving on their record
keeping. The correlation coefficient established a strong positive and significant correlation
coefficient between tax education and turnover tax compliance while the enforcement
measures and turnover tax compliance had a significant positive relationship. Lastly, the
regression analysis and correlation analysis established a significant positive relationship
between integrated tax system with turnover tax compliance. The current study concluded
that enhanced tax education among the Juakali Artisans is likely to lead to improved
turnover tax compliance. Also, increased use of enforcement measures on Juakali Artisans
in Kitui County could lead to increased turnover tax compliance among Juakali Artisans in
kitui municipality. Increased use of integrated tax system could lead to increased level of
turnover tax compliance. The current study recommends that Kenya Revenue Authority
provide the taxpayers with breakdown of how the taxes collected are utilized by the tax
authority which is likely to help improve on turnover tax compliance among the Juakali
Artisans. Also, enforcement officers be professional on their enforcement efforts so as to
help build positive image about Kenya Revenue Authority and the tax system. Lastly, more
studies should be done using more variables like technology and taxpayers’ perception so
as to establish which affect turnover tax compliance.
Description
Post Graduate Diploma in Tax Administration
Keywords
Turn over tax, micro entreprise, Tax Copliance