ANALYSIS OF FACTORS AFFECTING TAX COMPLIANCE BY SMES IN KIAMBU COUNTY
DOI:
https://doi.org/10.47941/jacc.69Keywords:
Factors analysis, Tax compliance, SmesAbstract
Purpose: The purpose of this study was to determine factors affecting tax compliance by Smesin Kiambu County
Methodology: The study adopted descriptive survey design and the research. The study population was 1084Smes in Kiambu County where a sample size of 325Smes was selected. Data was collected through structured and unstructured Questionnaires. Data was analyzed using Statistical Package for Social Sciences (SPSS) and results presented in frequency tables to show how the responses for the various questions posed to the respondents.
Results: The study findings revealed that Non compliance opportunities, compliance cost, knowledge requirements and decision frames had a positive and significant effect on tax compliance. The study led to conclusion that the authorities had a weak capacity in detecting tax evasion, it was cheaper to bribe a tax official than pay full amount of tax, corrupt, fine and penalties deterred tax evasion and that degree of regulation deterred tax evasion, that tax system and rates affected the rate and amounts of tax evasion, nature and degree of regulations affected tax evasion, size and how the business was structured had a direct or indirect effect on tax evasion, location and focus of business affected tax evasion and that the type of business the tax payers were in affected tax evasion.
Policy recommendation: The study recommended that the authorities should adopt high and modern technology to help in detecting tax evasion, proper measures should be emphasized on officials taking bribes, fines and penalties should be issued to those evading paying tax and that proper regulatory framework should be put in place to deter tax evasion and that the government should consider increasing tax incentives such as exemptions and tax holidays as these will not only encourage voluntary compliance but also attract investors who are potential viable tax payers in the future.
Downloads
References
Ahmed, E. and Braithwaite, V. (2005), "Understanding small business taxpayers - issues of deterrence, tax morale, fairness and work practice", International Small Business Journal.
Antonides, G. and Robben, H.S.J. (1995), "True positives and false alarms in the detection of tax evasion", Journal of Economic Psychology.
Ashby, J.S., Webley, P. and Haslam, A.S. (2009), "The role of occupational taxpaying cultures in taxpaying behaviour and attitudes", Journal of Economic Psychology.
Berkery, P.M. Jr and Knell, S.F. (1992), "Small business non-compliance: a view from the trenches",The National Public Accountant.
Gaetan, N. (2008), "Corporate income tax and economic distortions", Working Paper No. 2477, CESifo, Munich.
Haber, S. and Reichel, A. (2007), "The cumulative nature of the entrepreneurial process: the contribution of human capital, planning and environment resources to small venture performance", Journal of Business Venturing.
Haber, S. and Reichel, A. (2007), "The cumulative nature of the entrepreneurial process: the contribution of human capital, planning and environment resources to small venture performance", Journal of Business Venturing.
Hanlon, M., Mills, L. and Slemrod, J. (2007), "An empirical examination of corporate tax non-compliance", in Auerbach, A.J., Hines, J.R. and Slemrod, J. (Eds),Taxing Corporate Income in the 21st Century, Cambridge University Press, New York, NY.
Jackson, S.B., Shoemaker, P.A., Barrick, J.A. and Burton, F.G. (2005), "Taxpayers' prepayment positions and tax return preparation fees",Contemporary Accounting Research.
Joulfaian, D. and Rider, M. (1998), "Differential taxation and tax evasion by small business", National Tax Journal.
Kahneman, D. and Tversky, A. (1979), "Prospect theory: an analysis of decision under risk", Econometrica.
Kirchler, E. (2007),The Economic Psychology of Tax Behaviour, Cambridge University Press, Cambridge.
Kirchler, E. and Maciejovsky, B. (2010), "Tax compliance within the context of gain and loss situations, expected and current asset position, and profession", Journal of Economic Psychology.
Kirchler, E., Hoelzl, E. and Wahl, I. (2008), "Enforced versus voluntary tax compliance: the "˜slippery slope' framework", Journal of Economic Psychology.
Kirchler, E., Maciejovsky, B. and Schneider, F. (2009), "Everyday representations of tax avoidance, tax evasion, and tax flight: do legal differences matter?", Journal of Economic Psychology.
Kirchler, E., Maciejovsky, B. and Schneider, F. (2003), "Everyday representations of tax avoidance, tax evasion, and tax flight: do legal differences matter?", Journal of Economic Psychology.
Kirchler, E., Niemirowski, A. and Wearing, A. (2006), "Shared subjective views, intent to cooperate and tax compliance: similarities between Australian taxpayers and tax officers", Journal of Economic Psychology.
Mutai B.K (2001) How to write standard Dissertation:A systematic and Simplified Approach,Firstedition.New York; Thelley Publications
NachmiasC.f&Nachmias D (1996) Research Methods in Social Science,FifthEdition.NewYork:StMartins Press
Organisation for Economic Co-operation and Development (2004),Compliance Risk Managment: Managing and Improving Tax Compliance, Centre for Tax Policy and Administration, Organisation for Economic Co-operation and Development, Paris.
OrodhoJ.A.(2008) Technique of writing Research Proposal and Reports in Education and Social Sciences Maseno;Kaneja
Paton, (2012) "The Paradox of Multi-stakeholder Collaboration. Insights From Sustainable Silicon Valley's Regional CO2 Emissions Reduction Program" the Journal ofEnvironmental Sustainability.
Peterlin,R&Durban,M (2004) The Professional Writing Guide;writing well and Knowing Why.WariedWood;Robert Coco
Robben, H.S.J., Webley, P., Elffers, H. and Hessing, D.J. (1990a), "Decision frames, opportunity and tax evasion: an experimental approach", Journal of Economic Behavior and Organization.
Schuetze, H.J. (2012), "Profiles of tax non-compliance among the self-employed in Canada: 1969 to 1992",Canadian Public Policy - Analyse de Politiques.
Thaler, R.H. (1999), "Mental accounting matters", Journal of Behavioral Decision Making.
Webley, P. (2004), "Tax compliance by businesses", in Sjo¨gren, H. and Skogh, G. (Eds),New Perspectives on Economic Crime, Edward Elgar, Cheltenham.
Williams, C.C. and Round, J. (2009), "Evaluating informal entrepreneurs' motives: evidence from Moscow", International Journal of Entrepreneurial Behaviour& Research.
Downloads
Published
How to Cite
Issue
Section
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
