Tax Education and Tax Compliance of Manufacturing Small And Medium Enterprises in Nairobi City County, Kenya
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Date
2024-06
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Kenyatta University
Abstract
To enlighten taxpayers regarding their tax information, the Kenyan tax authorities have made tax education a top concern. In order to promote voluntary tax compliance and boost national revenue, this kind of education is essential. Low tax compliance among SMEs limits revenue generation from government and, consequently, inefficient government expenditure since it makes it harder for the state to amass family earnings, which are vital assets for speculating. Because they produce taxable income for a nation, SMEs are important for the advancement of the financial sector. SMEs are considered to be the "difficult to evaluate aggregates from the informal sector" and are less in compliance with taxes than large enterprises. However, the goal of this study is to investigate how tax education affects the compliance with tax laws of manufacturing SMEs in Nairobi City County, Kenya. It specifically seeks to assess the effects of stakeholders' awareness programs, electronic taxpayer education, and print media taxpayer education on the tax compliance of manufacturing SMEs in Nairobi City County, Kenya. Stakeholders, tax planning, and planned behavior theories served as the study's foundations. 641 manufacturing SMEs in Nairobi was the study's targeted audience, which used descriptive research approach. Using stratified sampling technique, the study selected 100 businesses from different sectors of manufacturing SMEs. Prior to estimating the data, diagnostic tests were performed. The variables were examined through descriptive and inferential analysis. The mean, frequency and pie chart of descriptive statistics were carried out. To evaluate the study, correlational analysis was employed. There was proper adherence to all research ethics. Output showed that stakeholder awareness programmes inversely and insignificantly affected manufacturing SMEs tax compliance; electronic taxpayer education positively affected tax compliance in a significant manner as it relates to manufacturing SMEs; and print media taxpayer education significantly affected tax compliance of manufacturing SMEs in Nairobi City County but however positively. The research advice that the stakeholder awareness programmes should be reduce as other individuals who pay tax may not be included in the awareness programmes thus leaving out a large number of individuals who are tax compliant in Nairobi City County, Kenya. This would provide avenue for a large tax base and hence increasing the level of tax compliance amongst the stakeholders.
Description
A Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of Master of Business Adminstration (Finance Option) of Kenyatta University, June 2024.
Supervisor
Bancy Muchira