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The Effect of Taxpayer Education on Tax Compliance in Kenya.( a case study of SME's in Nairobi Central Business District)

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  • Gitaru, Kelvin

Abstract

Tax is a very important aspect in any country. Revenue collected from taxes enables a country to provide services for its citizens and also development of its economy. However, Kenya does not collect as much revenue as it should. SMEs in particular have the potential of generating a lot of revenue for the government but this is not the case. This poses a significant problem to the government and the country’s growth as a whole. Therefore, this study aimed at assessing the effect of taxpayer education on tax compliance in Kenya, the case of SMEs in Nairobi CBD. The study established the effect of electronic taxpayer education, print media tax payer education, and stakeholder engagement on tax compliance. The target population was SMEs in Nairobi CBD Tax area. The study object was SMEs conducting business within Nairobi CBD. Data was collected by administration of pretested questionnaires to the owners of SMEs business. Data was analyzed using both descriptive and inferential statistics. The nominal and ordinal data was collected using questionnaires and later subjected to quantitative analysis using Statistical Package for Social Sciences. Data was presented in the form of frequency distribution tables & graphs. The study results showed that indeed; electronic taxpayer education, print media tax payer education, and stakeholder engagement, influences tax compliance among SMEs in Nairobi’s CBD area. Correlation Matrix was done to determine the correlation between the independent variables. The results showed that stakeholder’s sensitization is positively related to the taxpayers’ education to correctly calculate the tax compliance, with a correlation coefficient of 0.810. The study recommended that; there was need to improve on tax compliance in SMEs because they are below average, through intensive tax. For SMEs to improve their tax compliances, those involved in their tax matters need knowledge and skills to interpret the various tax laws and regulations. Tax compliance procedures should be simplified because in most cases they are found to be very complicated by SMEs, especially for those who do not keep proper books of account and sometimes do not understand the tax laws in order to reduce the compliance costs in terms of money and time. Small and Medium Enterprises should be levied lower amounts of taxes. The government should consider increasing tax incentives and exemptions. Reduce compliance costs, curb corruption, and improve on accountability and accessibility of KRA services.

Suggested Citation

  • Gitaru, Kelvin, 2017. "The Effect of Taxpayer Education on Tax Compliance in Kenya.( a case study of SME's in Nairobi Central Business District)," MPRA Paper 80344, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80344
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    References listed on IDEAS

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    1. C. Brooke Dobni & George Luffman, 2003. "Determining the scope and impact of market orientation profiles on strategy implementation and performance," Strategic Management Journal, Wiley Blackwell, vol. 24(6), pages 577-585, June.
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    Cited by:

    1. Alain Vilard Ndi Isoh & Forbe Hodu Ngangnchi & Ndifongong Ferdinand Nsanyui & Sheku Ahmed Fofanah, 2020. "The Impact of Tax Administration on Tax Compliance Levels in Fako Division of the Southwest Region of Cameroon," International Journal of Science and Business, IJSAB International, vol. 4(7), pages 76-90.
    2. Eliezer NIYORUGIRA, 2024. "The Effect of Taxpayer Awareness on Tax Compliance in Rwanda (Case Study: Kigali Sector 2022)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(4), pages 618-638, April.
    3. Vince Ratnawati & Ria Nelly Sari & Zuraidah Mohd Sanusi, 2019. "Education, Service Quality, Accountability, Awareness, and Taxpayer Compliance: Individual Taxpayer Perception," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 420-429, August.
    4. Musthafa Kemal Nasution & Fitri Santi & Husaini Husaini & Fadli Fadli & Kashan Pirzada, 2020. "Determinants of tax compliance: a study on individual taxpayers in Indonesia," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 1401-1418, December.

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    More about this item

    Keywords

    Taxpayer education; Tax compliance; SME.;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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