Tax Costs and Tax Compliance Behaviour in Kenya
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Date
2018-01
Authors
Abdul, Farida
Wang’ombe, David
Journal Title
Journal ISSN
Volume Title
Publisher
Academic Journals
Abstract
This study examines the influence of measures of tax compliance costs on tax compliance behaviour among
medium and large corporate taxpayers in Kenya. It uses a Structural Equation Modelling (SEM) technique to
establish the key cost drivers built using survey data, while controlling for key attributes of the tax system as
well as firm characteristics. The results indicate that tax compliance in Kenya significantly declines with
increase in tax compliance costs, particularly those related to understanding of the existing complex tax laws,
changes in tax rules as well as general costs of meeting the compliance and regulatory requirements. The
model constructs account for about 40% of variations in tax compliance behaviour in Kenya, which is above the
empirically accepted minimum for exploratory studies. From the results, the study recommends a focus by tax
authority and policymakers on measures to reduce these identified tax compliance costs. In addition, greater
emphasis should be put on investing in opportunities that reduce financial pressure on firms thus encouraging
tax compliance.
Description
A Research Article in the Journal of Accounting and Taxation
Keywords
Tax costs, Tax Compliance Behaviour, Income Tax, Corporate taxpayers, Kenya
Citation
Abdul, F., & Wangâ, D. (2018). Tax costs and tax compliance behaviour in Kenya. Journal of accounting and taxation, 10(1), 1-18.