Itax System Role in Tax Compliance for Residential Landlords in Kiambu Town, Kiambu County, Kenya
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Date
2025-03
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Kenyatta University
Abstract
The Kenyan government uses taxes as one of its major sources of income and therefore all taxpayers must conform to the laws on taxes. But people have started taking laws easy especially those that protect their rights. Taxes have turned out to be very costly to the business since they are taking a lot of money from their income. For instance, taxes on rental income are crucial for the government’s income but the problem is that the majority of the community does not fulfill tax obligations and therefore the government fails to collect adequate amounts and this hurts the provision of basic services. This is because Kenya`s real estate market has grown but the taxation revenue has not. As a result, this investigation ascertained the function performed by the iTax system on tax compliance among residential landlords in Kiambu Town, Kiambu County. As a result, it specifically looked at how tax rates, cost acceptance, tax literacy, and tax awareness all relate to compliance. The inquiry was based on various theories which include fiscal exchange, ability to pay, institutional anomie, and economic deterrence. Using a descriptive research design, the study investigated 1,004 rental property owners in Kiambu Town. Applying Yamane's (1967) Formula to reach the 286 samples. Data was gathered through a designed questionnaire using a five-point rating scale, questionnaire's reliability was examined in a pilot study with 29 participants; a Cronbach's alpha of 0.7 was achieved. If the value is 0.7 or above then it is considered reliable. To maintain the naturalistic approach the study avoided using technical language. With the help of SPSS, The data which was primary was obtained via a questionnaire completed by the respondents was entered into an Excel file, and then exported into SPSS for evaluation. Quantitative descriptive measures which were adopted within the analysis thus include; frequencies, mean scores, and variability measures, whereas inferential statistics involved a multivariable regression model to evaluate relationships between variables. Additional tests that were conducted included; a multicollinearity diagnostic test, heteroskedasticity test, hausman test, and normality test. Among the ethical issues considered was seeking the approval of Kenyatta University to grant an introduction letter. The multiple regression analysis revealed, the following when every other variable stays unchanged, a rise in literacy regarding tax by unit which equals to 1 results in a 0.364 rise regarding compliance with residential rental taxation in Kiambu (β1= 0.364, p=0.000<0.05). Similarly, a single unit increase in awareness regarding tax leads to a 0.254 advancement in adherence (β1= 0.254, p=0.015<0.05). Regarding cost acceptance, a single unit rise contributes to a 0.235 rise in compliance (β1=0.235, p=0.002<0.05). Conversely, a rise in rates regarding tax causes a .221 decline in compliance (β1equals - 0.221, p equals 0.007<0.05). Examination thereby confirmed that literacy regarding tax, awareness regarding tax, Cost acceptance, and tax rate shape compliance with rental income taxation among estate owners in Kiambu. Research also recommends as follows KRA enhances literacy regarding tax and awareness through educational programs, workshops, and public campaigns to improve residential landlords' compliance. Cost acceptance should be addressed by making tax filing services more affordable and accessible through collaborations with certified professionals. Policymakers should review tax rates to ensure fairness, transparency, and simplicity in calculations. Implementing these measures will promote trust, reduce compliance burdens, and encourage voluntary tax adherence among landlords in Kiambu. Research also recommended subsequent research in this area to assess the impact of stakeholder sensitization and other unidentified factors on residential rental income tax adherence.
Description
A Research Project Submitted to the School of Business and Economics & Tourisim in Partial Fullfilment of the Requirements for the Award of the Degree in Master of Business Administration (Finance Option) Kenyatta University, June, 2025
Supervisor:
1.Fredrick Warui