Determinants of tax compliance behaviour in Kenya: case of tax payers in Nairobi county

Abstract

The study explores determinants of tax compliance in Kenya by analyzing data obtained from taxpayers interviewed within Nairobi County. Data for the study was obtained using structured questionnaires from 100 respondents arrived at by a stratified random sampling. It was established that tax compliance behaviour varies largely depending on whether the taxpayer is an individual or a corporate entity. The findings indicate compliance levels are higher in corporate than with individual tax payers. Findings showed that for corporate tax payers, enforcement measures had a negative impact on tax compliance level while tax rates, compliance costs and nature of tax had a positive impact. For individual tax payers; enforcement measures had a positive impact on tax compliance while tax rates, compliance costs, nature of tax had a negative impact on tax compliance. Results indicate that Kenya’s tax design enhances taxpayer’s compliance level as both individual and corporate tax payers reported high level of tax compliance despite asserting the presence of many taxes in Kenya.