Technological Tax Reforms and Tax Compliance Among Small and Medium Enterprises in Nyeri
Abstract
Kenya has had to contend with a consistent
imbalance between government revenue
and expenditure resulting in large and
chronic fiscal deficits. High level of noncompliance by SMEs has continued to
deprive the economy the much needed
revenue to fill the persistent tax gap.
Through a wide range of reforms, the
government of Kenya has tried to include
SMEs into the tax net. However,
compliance among SMEs still remains
low. This study sought after determining
the effect of technological tax reforms on
compliance among SMEs in Nyeri County,
Kenya. The study was premised on the
Fiscal Exchange Theory, the Economic
Deterrence Theory and the Optimal
Theory of Taxation. A descriptive survey
research design was adopted. The study
considered a ten year period from
2009/2010 to 2018/2019 when a wide
range of tax reforms had been instituted by
the revenue authority with a view to
address numerous compliance
shortcomings. The target population was
made up of 891 SMEs registered and
licensed by the County Government of
Nyeri. Proportionate stratified random
sampling technique was applied to select a
sample of 95 respondents who comprised
of SME owners. The study used primary
and secondary data. A semi structured
questionnaire was used to collect primary
data while secondary data was gathered
from the SMEs books of accounts and
records as well as data from Kenya
Revenue Authority. Validity of the
instrument was tested through expert
opinion and pretesting. Reliability was
tested using Cronbach Alpha Reliability
analysis. Data was analysed using
descriptive and inferential statistics. The
multiple regression analysis results
provided evidence that technological tax
reforms (β=0.890, p=0.001) has a positive
and statistically significant effect on tax
compliance. The results of Pearson
correlation analysis indicated that
technological tax reforms (r=0.704,
p=0.011) has a strong positive and
statistically significant relationship with
tax compliance. The study recommends
enhanced adoption and implementation of
tax reforms, and particularly the
technological tax reforms as the reforms
were effective in improving tax
compliance levels. The study recommends
enhanced taxpayer education on matters
related to I tax. The study further
recommends adoption of simpler payment
options such as Mpesa, Airtel Money and
other mobile banking innovations.
URI
https://iajournals.org/articles/iajef_v3_i7_198_220.pdfhttp://ir-library.ku.ac.ke/handle/123456789/22836