Tax Knowledge and Tax Compliance Among Sme Owners in Nairobi County

Abstract

The study's goal was to ascertain how knowledge in taxes influenced compliance to taxes amongst Nairobi's SMEs. In this project, survey data was utilized to determine this relationship. The SME community in Nairobi, Kenya, was the study population. In Nairobi as a whole, there are 60506 SMEs. 382 SMEs made up the sampled population. Questionnaires were used to gather primary data. Inferential as well as descriptive statistical methods were employed to analyse the data after they were collected.The study's findings demonstrate a strong and favourable correlation between tax knowledge and tax compliance, with α=0.01>0.05. According to the regression coefficient, the model's constant value was 0.307, meaning that tax compliance would have a value of 0.307 if all other factors remained constant. The study also found that, as indicated by the beta value of 1.182, tax knowledge was a positive predictor of firm value. The beta value of 0.661 indicates that tax administration was also found to be a positive predictor of tax compliance. The beta value of 0.310 indicates that the cost of tax compliance was also found to be a positive predictor of tax compliance. Their study's conclusions showed that in Nakuru County, Kenya, tax rates and taxpayer awareness had a positive and noteworthy effect on SME paying taxes.