Innovative Tax Coping Mechanisms in Nairobi County: A Literature Review

Abstract

Taxation has been identified as a major threat to the growth of small and medium enterprises (SMEs) not only in highly industrialized countries such USA but also in less industrialized c ountries, Kenya included. Taxation in general increases the costs of operation of running small and medium enterprises. To compensate for the increased costs of operation, prices on goods are raised thus causing the amounts of sales to go dow n. The questio n that appears to generate surprisingly little debate in Kenya is the scope for legally mitigating t axes by individuals and SMEs. Entrepreneurship is about change and since entrepreneurs are innovators, they should devise ways and means of coping with the adverse and threatening effects of taxation in order to survive, grow and sustain their businesses. How then can Kenyan individuals and business enterprises arrange their affairs within the current legal environment so as to minimize their tax burden? The general objective of this paper is to examine the innovative tax coping mechanisms by SMEs in Nairobi County. This paper is significant as it highlights important ways in which entrepreneurs in Nairobi can cope with taxation within the legal framework to e nhance their business performance. Moreover, the paper analyses significant literature that could be used as a point of reference by other scholars conducting research in the same field.