Factors influencing turnover tax compliance in the Kenya revenue authority domestic taxes department in Nairobi county

Abstract

Taxation is the avenue through which persons both corporate and individuals contribute towards revenues of their country or tax jurisdictions they operate in. On the other hand taxation is the most important avenue through which governments generate revenue necessary for development projects and recurrent expenditure. This study sought to identify the factors influencing turnover tax compliance in the Kenya revenue authority domestic taxes department in Nairobi County. The researcher outlined a detailed literature review and identified the variables for this research to be taxpayers‟ perception of the tax system, taxpayers‟ level of awareness, enforcement efforts by the revenue authority and costs of compliance. A target population of 560 taxpayers was selected and given the large population of taxpayers in Nairobi County, a total sample size of 56 was picked as representative, to be the focus of this study. A descriptive survey design was used. Stratified sampling technique was used to create a sampling frame ensuring that different and diverse types of entities were included in the survey. Data was collected using self–administered questionnaires and an interview guide. The collected data was analyzed using Statistical Package for Social Scientist software and findings presented using tables. The Findings from the study reveal that all the identified factors have a direct influence on the tax compliance efforts by taxpayers in the turnover businesses. The perceptions of taxpayers towards the tax system greatly determine the level of compliance for turnover tax. The findings suggest that taxpayers are not aware of their responsibilities; however, the result also indicated that other factors like cost of compliance and complicated systems result into the low levels of compliance. Taxpayer‟s perception of tax system is inclined to change due to changing tax knowledge. This suggests that increased tax knowledge may have significant impact on perception of tax system. The recommendations of the study are; K.R.A should undertake intensive and increased sensitization of turnover, K.R.A should train their staff diligently on customer service, and K.R.A should ensure all taxpayers who fall under turnover tax are registered. The insights of this research will help address the factors influencing turnover tax compliance in the Kenya revenue authority domestic taxes department in Nairobi County.