Open AccessANALYSIS OF FACTORS AFFECTING TAX COMPLIANCE BY SMES IN KIAMBU COUNTY
Author(s) -
Simon Mbuguah,
Mwambia Mwambia,
Bernard Baimwera
Publication year - 2017
Publication title -
journal of accounting
Language(s) - English
Resource type - Journals
ISSN - 2520-7466
DOI - 10.47941/jacc.69
Subject(s) - tax evasion , evasion (ethics) , business , public economics , compliance (psychology) , tax credit , accounting , economics , medicine , psychology , social psychology , immune system , immunology
Purpose: The purpose of this study was to determine factors affecting tax compliance by Smesin Kiambu CountyMethodology: 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.