Determinants of Tax Compliance among Small and Medium Enterprises in Bungoman County, Kenya

摘要

Taxation is the main source of revenue to any government, since it the only stable flow of revenue that is predictable. a large segment of the informal sector, especially the smes in Bungoma county exhibit low tax compliance levels. the purpose of the study was to investigate the determinants of tax compliance among smes in Bungoma county. the study was guided by the following objective; to determine the effect of cost on tax compliance among smes in Bungoma county. The study applied a descriptive survey design of all the SMEs in Bungoma county. According to, Nteere et al (2012), and Creswell (2005), descriptive survey design enables the researcher to collect, analyze and link both qualitative and quantitative data in a single study. The population of the study consisted of all the SMEs in Bungoma County. A total of 170 SMEs in Bungoma County were targeted for the study. With a sample of size of 227 respondents. Closed-ended questionnaires covered all the issues relating to the causes of low tax compliance among SMEs in Bungoma County were personally administered the questionnaires to the respondents 227 managers, 1 from each of the sampled organizations in sectors. Pilot test was done to verify the reliability and validity of the research instrument. The data collected was analyzed using descriptive statistics, correlations, and linear regression analysis. Results showed that there was a significant influence of cost on tax compliance in Bungoma County. From study findings and earlier discussion, it was noted that cost influence tax compliance negatively and significantly contributing 9.6% variability to tax compliance by SMEs when other factors are held constant. The Kenya Revenue Authority should consider revising the cost of tax product downwards. Additionally, Kenya Revenue Authority should make the tax filing process convenient, easy and costless. Similarly, Kenya revenue authority, should not impose penalties on late filing of taxes. The tax computation should be as easy as possible to enhance eligible tax payers’ compliance.