Abstract:This study seeks to establish factors affecting tax compliance by Small and Medium Enterprises, with special emphasis on Income Tax and Value Added Tax and their effects on government revenue. Tax compliance level which is internal factor affecting tax revenue not only undermines tax administration infrastructure but also makes the tax base narrow and inequitable. The objectives of the study include establishing the influence of compliance cost, fines and penalties and attitudes of tax compliance among Small and Medium Enterprises. The study adopts a descriptive research design involving both qualitative and quantitative research methodology. The target population was 200, out of which a sample size of 132 respondents were drawn, using stratified and simple random sampling. Questionnaires were used to collect primary data from the respondents, which were analyzed using SPSS applying both descriptive and inferential analysis. There was a positive relationship between the tax and compliance cost (r=.514), fines and penalties (r=.415) attitudes (r=.546) and tax compliance. The findings showed that compliance cost, fines and penalties and attitude had significant relationship with tax compliance. It is recommended that the tax system should provide a clear and simple guideline on how to fill tax returns but also enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers, there should be moderate levels of fines and taxes so that SMEs are encouraged to comply since they will keep accurate records for taxation purposes in order to avoid fines and penalties.
The document summarizes Mongolia's 2011 Agricultural and Livestock Census. It provides legal background for the census and describes its management, organization, budget, scope, period, concepts, data collection forms, and indicators. Key points include:
- The census was mandated by Mongolia's Statistics Law and conducted nationwide in May-June 2012.
- It utilized a state commission and hired enumerators to conduct a full enumeration of crop enterprises and households and a sample survey of livestock households.
- Over 700 indicators were collected across agriculture, livestock, forestry, fisheries and administrative units.
- Results showed steady increases in the total numbers of all livestock types between 2011-2015.
The document summarizes Mongolia's 2011 Agricultural and Livestock Census. It provides legal background for the census and describes its management, organization, budget, scope, period, concepts, data collection forms, and indicators. Key points include:
- The census was mandated by Mongolia's Statistics Law and conducted nationwide in May-June 2012.
- It utilized a state commission and hired enumerators to conduct a full enumeration of crop enterprises and households and a sample survey of livestock households.
- Over 700 indicators were collected across agriculture, livestock, forestry, fisheries and administrative units.
- Results showed steady increases in the total numbers of all livestock types between 2011-2015.
MANUAL PËR PUNIMIN E DIPLOMËS MASTER
1.Hyrje
2.Informacion i përgjithshëm mbi programin e studimit “Master”
Korniza e kualifikimeve në Hapësirën Evropiane të Arsimit të Lartë
Programi i studimit
Nga konceptimi te punimi final
Kriteret e vlerësimit të punimit të diplomës master
3.Projekt-propozimi i temës së punimit të diplomës së masterit
Përmbajtja e projekt-propozimit të punimit të diplomës së masterit
Etika e kërkimit
Struktura e punimit shkencor
4.Shtojca
Shtojca 1: Projektpropozim për punimin kërkimor
Shtojca 2: Format i ballinës dhe faqes së pasme të punimit
Shtojca 3: Leje për mbrojtjen e punimit
Shtojca 4: Vlerësimi i udhëheqësit shkencor
Shtojca 5: Fletë vlerësimi
#MesueseAurela
FACTORS AFFECTING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN KITALE...paperpublications3
Abstract:This study seeks to establish factors affecting tax compliance by Small and Medium Enterprises, with special emphasis on Income Tax and Value Added Tax and their effects on government revenue. Tax compliance level which is internal factor affecting tax revenue not only undermines tax administration infrastructure but also makes the tax base narrow and inequitable. The objectives of the study include establishing the influence of compliance cost, fines and penalties and attitudes of tax compliance among Small and Medium Enterprises. The study adopts a descriptive research design involving both qualitative and quantitative research methodology. The target population was 200, out of which a sample size of 132 respondents were drawn, using stratified and simple random sampling. Questionnaires were used to collect primary data from the respondents, which were analyzed using SPSS applying both descriptive and inferential analysis. There was a positive relationship between the tax and compliance cost (r=.514), fines and penalties (r=.415) attitudes (r=.546) and tax compliance. The findings showed that compliance cost, fines and penalties and attitude had significant relationship with tax compliance. It is recommended that the tax system should provide a clear and simple guideline on how to fill tax returns but also enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers, there should be moderate levels of fines and taxes so that SMEs are encouraged to comply since they will keep accurate records for taxation purposes in order to avoid fines and penalties.
Keywords: Direct tax, Indirect tax, Medium enterprise, Productive expenditure, tax evasion, tax impact.
https://www.ijmst.com/
IJMST Volume 1 Issue 5, Manuscript 3
This study sought to examine the effect of tax authority regulation and administration on
voluntary compliance among small-scale businesses in Kakamega Municipality. The
beneficiaries of the study are to be the Kenya revenue authority and relevant tax agencies. It
may serve as input in designing the tax system both at the counties and national government;
may serve as a reference for further studies in this area The research design adopted was a
descriptive survey as the findings were be generalized to a large population and it will
determine the current situation on the ground thereby providing the opportunity to improve it
accordingly. Data was collected using structured questionnaires to 124 sampled taxpayers
purposively sampled. Markets were stratified in the identification of business. The project
was analyzed using descriptive statistics and SPSS. The taxpayers do not to comply with the
tax laws due to overstatement of tax rates or lack of tax equity and ineffectiveness of the tax
authority. It needs to strengthen itself by educating and training its employees, by
computerizing its operations and devoting additional resources.
Determinants of Tax Compliances among SMEs in Mwanza RegionAI Publications
This study was conducted to analyze determinants of Tax Compliances among Small and Medium Enterprises (SMEs) in Mwanza region: A case study was at Buswelu ward in Ilemela district. The specific objectives were to assess the impact of taxpayers’ attitude on tax compliance, to assess the effect of tax education, the effect of tax rate and the effect of tax penalties on tax compliance. The study employed quantitative research approach, the study targets Small and Medium Enterprises (SMES) taxpayers, sample size was 175 among populace size 322 who were selected random at Buswelu ward. Data collected through questionnaires and analyzed through SPPS system version 20 were used in the analysis of the data collected. The study finding shows that tax payers perceived that there is no fairness in tax estimation and they do not trust that their tax contributions are used properly by the government. Also finding shows that tax education provides awareness to tax payers on the importance of paying tax, provides information to tax payers about guidelines and laws related to tax payments and services results into higher compliance levels, thus more of funds through revenue collection. This study concludes that tax payer’s attitude, tax education and tax rate are the significant predictors of tax compliance. Tax compliance can be improved if tax payers have positive attitude towards paying tax; perceptions that there is fairness in tax administration, The study recommends that the government should ensure equity in government spending, to ensure fairness in tax rate estimation, to ensure transparency and overcome the problem of corruptions and misuse of fund, also the study emphasized in provide education to tax payers through different means through trainings, seminars, workshops and programs through radio, television and social media, because it increases awareness of tax payers on tax payments. This brought trust to the government which in turn contributed in creating positive attitude of taxpayers to comply with tax filing, reporting and payments.
The Effect of Tax Payment on the Performance of SMEs: The Case of Selected SM...Evans Tee
This document discusses a study that examined the effect of Ghana's tax payment system on the performance of small and medium enterprises (SMEs) in the Ga West Municipal Assembly. The study utilized a survey of 102 managers and executive officers of SMEs, collecting data through questionnaires and interviews. Regression and correlation analyses were used to analyze the relationship between tax payments and SME financial performance, as measured by annual sales revenue. The results indicated that most respondents perceived Ghana's existing tax policies to have a negative impact on SME growth. The findings suggest the tax system could be reformed to better support SME development and align with their needs.
Effects of government taxation policy on sales revenue of SME in Uasin Gishu ...inventionjournals
ABSTRACT: In Kenya, SME provide source of employment creation, innovation, competition, economic dynamism which eventually lead to poverty alleviation and national growth. Government taxation policy is one of the factors that constitute the SMEs‟ economic surroundings. This study sought to find out the effects of government taxation policy on sales revenue of SME in Kenya and particularly Uasin Gishu County. In order to achieve the purpose of this study, the specific research objective was addressed: to find out the effects of government taxation policy on sales revenue of SME. The data for this study was collected from primary and secondary sources. While the research instruments were questionnaire, interview and document analysis, the study population comprised of staff and management of SME within Uasin Gishu County, Kenya who formed the sample for the study. The explanatory research design was employed in the study. The samples for the study were selected using stratified random and simple random sampling methods. The data from the research instruments were coded and analyzed using the SPSS. Descriptive statistics, frequency tables, percentages, mean and standard deviation were used to present the data, while Correlation was used to test the hypotheses. Results of the study found statistically significant relationships between the three dimensions of government taxation policy and sales revenue. The researcher concluded therefore that government taxation policy had a significant impact on sales revenue of SMEs.
The government of Ghana replaced Sales and Services Tax with Value Added Tax (VAT)) in March 1998 with the aim of widening the tax net and improving the efficiency of tax administration. It has been 17 years since VAT was introduced in Ghana, but the VAT systems have not achieved most of its objectives due to many compliance challenges. VAT strives on voluntary compliance and accurate bookkeeping because VAT is self-assessed. This paper examines the various compliance challenges facing VAT administration in Ghana and makes recommendations for improving voluntary compliance and efficient VAT administration. Semi-structured interviews were conducted with VAT Administrators and taxable persons to ascertain their perceptions on the major challenges confronting compliance and how best to address them. The study found out that VAT compliance is low partly because VAT registration and filing procedures are too complex for the small traders. Also most businesses fail to keep proper books of accounts on which accurate VAT assessment could be done. In addition many taxpayers fail to comply because they have negative perception about how the government uses tax revenue. The paper makes many recommendations that could be implemented to improve VAT compliance in Ghana. These include implementation of electronic VAT registers; simplification of VAT registration and filing procedures, decentralization and ensuring regular VAT Audits.
Vat Compliance Cost for SMEs in Algeria: Burden,Complexity and Business FactorsQUESTJOURNAL
Abstract: This study investigates the cost of compliance for VAT in Algeria. Specifically, it examines the burden of VAT compliance cost by the small and medium enterprises (SMEs) in Algeria, the complexity of the VAT law and its compliance, and the business factors affecting VAT compliance cost.This study used questionnaire survey to collect data from the respondents for the purpose of investigating the VAT compliance cost. Thisstudy focuses on the SME operators within Adrar State in Algeria. The results of the study show that majority of the respondents think that VAT compliance cost is a burden to their company and VAT law is complex and costly for them. The high cost of compliance can discourage voluntarily compliance among owners of the SMEs. This study also reveals that business location of the SMEs does not affect their compliance cost. On the other hand, business size, business type and external advisors affect the compliance cost of the SMEs. In Algeria, SMEs are the backbone of the economy. However, the high compliance cost for this sector can discourage investors to invest in SMEs. Therefore, the government needs to review the tax policy, structure and legislation, and tax administration with a view toreduce the tax compliance cost for VAT specifically for the SMEs in Algeria.
MANUAL PËR PUNIMIN E DIPLOMËS MASTER
1.Hyrje
2.Informacion i përgjithshëm mbi programin e studimit “Master”
Korniza e kualifikimeve në Hapësirën Evropiane të Arsimit të Lartë
Programi i studimit
Nga konceptimi te punimi final
Kriteret e vlerësimit të punimit të diplomës master
3.Projekt-propozimi i temës së punimit të diplomës së masterit
Përmbajtja e projekt-propozimit të punimit të diplomës së masterit
Etika e kërkimit
Struktura e punimit shkencor
4.Shtojca
Shtojca 1: Projektpropozim për punimin kërkimor
Shtojca 2: Format i ballinës dhe faqes së pasme të punimit
Shtojca 3: Leje për mbrojtjen e punimit
Shtojca 4: Vlerësimi i udhëheqësit shkencor
Shtojca 5: Fletë vlerësimi
#MesueseAurela
FACTORS AFFECTING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN KITALE...paperpublications3
Abstract:This study seeks to establish factors affecting tax compliance by Small and Medium Enterprises, with special emphasis on Income Tax and Value Added Tax and their effects on government revenue. Tax compliance level which is internal factor affecting tax revenue not only undermines tax administration infrastructure but also makes the tax base narrow and inequitable. The objectives of the study include establishing the influence of compliance cost, fines and penalties and attitudes of tax compliance among Small and Medium Enterprises. The study adopts a descriptive research design involving both qualitative and quantitative research methodology. The target population was 200, out of which a sample size of 132 respondents were drawn, using stratified and simple random sampling. Questionnaires were used to collect primary data from the respondents, which were analyzed using SPSS applying both descriptive and inferential analysis. There was a positive relationship between the tax and compliance cost (r=.514), fines and penalties (r=.415) attitudes (r=.546) and tax compliance. The findings showed that compliance cost, fines and penalties and attitude had significant relationship with tax compliance. It is recommended that the tax system should provide a clear and simple guideline on how to fill tax returns but also enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers, there should be moderate levels of fines and taxes so that SMEs are encouraged to comply since they will keep accurate records for taxation purposes in order to avoid fines and penalties.
Keywords: Direct tax, Indirect tax, Medium enterprise, Productive expenditure, tax evasion, tax impact.
https://www.ijmst.com/
IJMST Volume 1 Issue 5, Manuscript 3
This study sought to examine the effect of tax authority regulation and administration on
voluntary compliance among small-scale businesses in Kakamega Municipality. The
beneficiaries of the study are to be the Kenya revenue authority and relevant tax agencies. It
may serve as input in designing the tax system both at the counties and national government;
may serve as a reference for further studies in this area The research design adopted was a
descriptive survey as the findings were be generalized to a large population and it will
determine the current situation on the ground thereby providing the opportunity to improve it
accordingly. Data was collected using structured questionnaires to 124 sampled taxpayers
purposively sampled. Markets were stratified in the identification of business. The project
was analyzed using descriptive statistics and SPSS. The taxpayers do not to comply with the
tax laws due to overstatement of tax rates or lack of tax equity and ineffectiveness of the tax
authority. It needs to strengthen itself by educating and training its employees, by
computerizing its operations and devoting additional resources.
Determinants of Tax Compliances among SMEs in Mwanza RegionAI Publications
This study was conducted to analyze determinants of Tax Compliances among Small and Medium Enterprises (SMEs) in Mwanza region: A case study was at Buswelu ward in Ilemela district. The specific objectives were to assess the impact of taxpayers’ attitude on tax compliance, to assess the effect of tax education, the effect of tax rate and the effect of tax penalties on tax compliance. The study employed quantitative research approach, the study targets Small and Medium Enterprises (SMES) taxpayers, sample size was 175 among populace size 322 who were selected random at Buswelu ward. Data collected through questionnaires and analyzed through SPPS system version 20 were used in the analysis of the data collected. The study finding shows that tax payers perceived that there is no fairness in tax estimation and they do not trust that their tax contributions are used properly by the government. Also finding shows that tax education provides awareness to tax payers on the importance of paying tax, provides information to tax payers about guidelines and laws related to tax payments and services results into higher compliance levels, thus more of funds through revenue collection. This study concludes that tax payer’s attitude, tax education and tax rate are the significant predictors of tax compliance. Tax compliance can be improved if tax payers have positive attitude towards paying tax; perceptions that there is fairness in tax administration, The study recommends that the government should ensure equity in government spending, to ensure fairness in tax rate estimation, to ensure transparency and overcome the problem of corruptions and misuse of fund, also the study emphasized in provide education to tax payers through different means through trainings, seminars, workshops and programs through radio, television and social media, because it increases awareness of tax payers on tax payments. This brought trust to the government which in turn contributed in creating positive attitude of taxpayers to comply with tax filing, reporting and payments.
The Effect of Tax Payment on the Performance of SMEs: The Case of Selected SM...Evans Tee
This document discusses a study that examined the effect of Ghana's tax payment system on the performance of small and medium enterprises (SMEs) in the Ga West Municipal Assembly. The study utilized a survey of 102 managers and executive officers of SMEs, collecting data through questionnaires and interviews. Regression and correlation analyses were used to analyze the relationship between tax payments and SME financial performance, as measured by annual sales revenue. The results indicated that most respondents perceived Ghana's existing tax policies to have a negative impact on SME growth. The findings suggest the tax system could be reformed to better support SME development and align with their needs.
Effects of government taxation policy on sales revenue of SME in Uasin Gishu ...inventionjournals
ABSTRACT: In Kenya, SME provide source of employment creation, innovation, competition, economic dynamism which eventually lead to poverty alleviation and national growth. Government taxation policy is one of the factors that constitute the SMEs‟ economic surroundings. This study sought to find out the effects of government taxation policy on sales revenue of SME in Kenya and particularly Uasin Gishu County. In order to achieve the purpose of this study, the specific research objective was addressed: to find out the effects of government taxation policy on sales revenue of SME. The data for this study was collected from primary and secondary sources. While the research instruments were questionnaire, interview and document analysis, the study population comprised of staff and management of SME within Uasin Gishu County, Kenya who formed the sample for the study. The explanatory research design was employed in the study. The samples for the study were selected using stratified random and simple random sampling methods. The data from the research instruments were coded and analyzed using the SPSS. Descriptive statistics, frequency tables, percentages, mean and standard deviation were used to present the data, while Correlation was used to test the hypotheses. Results of the study found statistically significant relationships between the three dimensions of government taxation policy and sales revenue. The researcher concluded therefore that government taxation policy had a significant impact on sales revenue of SMEs.
The government of Ghana replaced Sales and Services Tax with Value Added Tax (VAT)) in March 1998 with the aim of widening the tax net and improving the efficiency of tax administration. It has been 17 years since VAT was introduced in Ghana, but the VAT systems have not achieved most of its objectives due to many compliance challenges. VAT strives on voluntary compliance and accurate bookkeeping because VAT is self-assessed. This paper examines the various compliance challenges facing VAT administration in Ghana and makes recommendations for improving voluntary compliance and efficient VAT administration. Semi-structured interviews were conducted with VAT Administrators and taxable persons to ascertain their perceptions on the major challenges confronting compliance and how best to address them. The study found out that VAT compliance is low partly because VAT registration and filing procedures are too complex for the small traders. Also most businesses fail to keep proper books of accounts on which accurate VAT assessment could be done. In addition many taxpayers fail to comply because they have negative perception about how the government uses tax revenue. The paper makes many recommendations that could be implemented to improve VAT compliance in Ghana. These include implementation of electronic VAT registers; simplification of VAT registration and filing procedures, decentralization and ensuring regular VAT Audits.
Vat Compliance Cost for SMEs in Algeria: Burden,Complexity and Business FactorsQUESTJOURNAL
Abstract: This study investigates the cost of compliance for VAT in Algeria. Specifically, it examines the burden of VAT compliance cost by the small and medium enterprises (SMEs) in Algeria, the complexity of the VAT law and its compliance, and the business factors affecting VAT compliance cost.This study used questionnaire survey to collect data from the respondents for the purpose of investigating the VAT compliance cost. Thisstudy focuses on the SME operators within Adrar State in Algeria. The results of the study show that majority of the respondents think that VAT compliance cost is a burden to their company and VAT law is complex and costly for them. The high cost of compliance can discourage voluntarily compliance among owners of the SMEs. This study also reveals that business location of the SMEs does not affect their compliance cost. On the other hand, business size, business type and external advisors affect the compliance cost of the SMEs. In Algeria, SMEs are the backbone of the economy. However, the high compliance cost for this sector can discourage investors to invest in SMEs. Therefore, the government needs to review the tax policy, structure and legislation, and tax administration with a view toreduce the tax compliance cost for VAT specifically for the SMEs in Algeria.
1) The document discusses building a sustainable tax base in Zimbabwe's deflationary economic environment.
2) A sustainable tax system should be fair, simple, equitable, and ensure those who can afford to pay the most taxes do so.
3) Initiatives to build a sustainable tax base include anti-corruption campaigns, automating processes, increasing the number of taxpayers, and supporting industry.
Functional Tax Governance Apparatus and Economic DevelopmentDr. Amarjeet Singh
The proportion of tax earnings to gross domestic
product (GDP) in Nigerian economy had been ranked and
affirmed the least in the sub-Sahara African and as
evolving economy, different reasons attested to this fact,
hence, the study is aimed at investigate the inherent lacuna
of tax governance apparatus in responses to economic
development as broad objective. The study employed field
research design, the research instrument that was deployed
for collection of data is purposive and structured
questionnaire targeted at elicit information from relevant
and related stakeholders in tax matters, the research
instrument and data collected were subjected to Cronbach
alpha test and heteroscedasticity test to affirm the
validity/reliability and best linear unbiased estimator of
data collected respectively. The result revealed that the
responsiveness of economic development to tax assessment,
tax policy and tax administration were statistically
significant inversely related while tax collection was
statistically insignificant related directly with economic
development. Thereby study concluded that poor
management and administration of tax system in Nigeria
responsible for adverse relationship that subsist between
the proportion of tax earnings to GDP and resulted
decayed and declined physical infrastructures and socioeconomic development.
This document discusses developing a harmonized tax regime to foster small business development in the East African Community (EAC). It analyzes the different tax systems of EAC countries and how they affect small businesses. The informal sector plays a large role in EAC economies and small businesses need support to formalize. Different approaches to taxing small businesses are considered, including presumptive taxation based on indicators like turnover. Harmonizing definitions of small and medium enterprises and tax bases across countries could help, but implementing reforms faces challenges around equity, compliance, and preventing tax evasion.
Deterrent tax measures and tax compliance in nigeriaAlexander Decker
This document summarizes a study that examines the effects of deterrent tax measures on tax compliance in Nigeria. It begins with an introduction that outlines the importance of taxes in generating government revenue. It then reviews Nigeria's existing tax policies and reforms, discussing the country's tax administration system. The study uses a regression analysis of survey responses to test hypotheses about the relationship between deterrent tax measures and compliance. The analysis finds that Nigeria's existing deterrent measures are inadequate and have not promoted compliance. It also finds that fostering voluntary compliance and taxpayer morale would enhance tax compliance. The study recommends that Nigerian revenue authorities adopt approaches to encourage voluntary compliance and appropriately sanction defaulters.
This document discusses a study that examines the issues and implications of implementing Value Added Tax (VAT) on e-transactions in Nigeria. The study aims to identify the challenges of implementing VAT on e-transactions and assess its potential effects. Some key challenges identified include out-of-date tax legislation, poor enforcement of existing laws, corruption, infrastructural limitations, technological complexity of e-transactions, and potential for double taxation. The empirical study analyzes survey responses from tax authorities, practitioners, and e-commerce stakeholders on these issues.
Effect of vat and tax on economy an analysis in the context of bangladesh.Alexander Decker
This document summarizes a research paper on the effects of taxes and VAT on the economy of Bangladesh. It provides background on VAT and how it has replaced sales taxes in Bangladesh. It discusses the country's current tax policies, including income tax rates that are progressive up to 25% and a uniform 15% VAT rate. It analyzes how the tax system affects people in Bangladesh, noting the heavy reliance on indirect taxes results in a small number of taxpayers shouldering the burden. The narrow tax base and exemptions are also issues. In conclusion, broadening the tax base is desirable but agricultural income exemptions need reconsideration given many affluent people claim agricultural income to avoid taxes.
The impact of tax administration(fod)projectjames segun
in many nation which have being having problem in financing there development, who have fail in their tax administration which have reduce their national revenue.
The impact of tax administration(fod)projectjames segun
in many nation which have being having problem in financing there development, who have fail in their tax administration which have reduce their national revenue.
Tax Elasticity, Buoyancy and Stability in ZimbabweIOSR Journals
The document analyzes tax elasticity, buoyancy, and stability in Zimbabwe from 2000-2013. It finds that Zimbabwe relies heavily on tax revenue to fund government spending. Using traditional regression and dummy variable approaches, the study calculates Zimbabwe's tax buoyancy at over 1, implying the tax system responds to income growth. Tax ratios varied over the period but generally increased after dollarization, reaching a peak of 40.2% in 2005. Several tables show tax performance and revenue by tax type. The document also analyzes Zimbabwe's many parastatals across various sectors and their inefficiencies that have led to losses.
An investigation of the effect of vat on revenue profiles of south western ni...Alexander Decker
This document summarizes a study that examined the effect of Value Added Tax (VAT) on the revenue profiles of state governments in Southwestern Nigeria from 2002 to 2011. The study used secondary data from approved budgets of five states. Panel regression analysis found that VAT had a positive and significant relationship with state revenues. The study concluded that increasing consumption through poverty alleviation could increase VAT revenues for states by boosting the goods and services subject to VAT.
Revenue Implications of Nigeria’s Tax System in NigeriaMoses Oduh
This document analyzes the properties of Nigeria's tax system, specifically the bases of company income tax, value added tax, and personal income tax. It finds that the bases are not stable and persistent, being volatile. The bases of company income tax and personal income tax are more sensitive to economic cycles, while the value added tax base is not sensitive. This supports Nigeria's recent tax policy reform of shifting focus from direct to indirect taxation, as VAT revenue will be less affected during economic downturns and help stabilize government budgets.
The ASSESSMENT of TAXATION on PERFORMANCE of MICRO and SMALL ENTERPRISE in th...Premier Publishers
The study is entitled the Assessment of taxation on performance of micro and small enterprise (MSE) in Nedjo town. The main objective of this study is to assess the taxation on performance of micro and small enterprise in the case of Nedjo town using descriptive research design. The total population of the study is 94 MSE firms running their business in Nedjo town. The study used stratified sampling procedures using the five sectors of the MSE firms as a stratum. In order to collect data, most MSE owners working in the position of manager and few MSE firm owner that work in the position accountants were contacted for data collection where MSE firms’ managers were not available at the time of data collection and data was analyzed by using statistical package for social science. The finding shows that age of respondents, tax system, tax rate, tax administration, tax level and tax education and training shows statistically significant positive impact on the performance of the MSE firms in correlation analysis. Also, the study found sex of respondents, age of respondents, educational status of respondents, tax system, tax administration, tax level and training shows a significant positive Assessment whereas tax compliance cost shows a significant negative Assessment on the performance of the MSE firms in regression analysis. Finally, the study recommended that tax administrators and tax policy makers are advised to improve existing tax system, tax rate, tax administration system, tax level, tax compliance costs as well as tax education and training so as to increase the performance of the MSE firms in the study area.
Similar to FACTORS AFFECTING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN KITALE TOWN TRANS-NZOIA COUNTY, KENYA (20)
Elevate Your Nonprofit's Online Presence_ A Guide to Effective SEO Strategies...TechSoup
Whether you're new to SEO or looking to refine your existing strategies, this webinar will provide you with actionable insights and practical tips to elevate your nonprofit's online presence.
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إضغ بين إيديكم من أقوى الملازم التي صممتها
ملزمة تشريح الجهاز الهيكلي (نظري 3)
💀💀💀💀💀💀💀💀💀💀
تتميز هذهِ الملزمة بعِدة مُميزات :
1- مُترجمة ترجمة تُناسب جميع المستويات
2- تحتوي على 78 رسم توضيحي لكل كلمة موجودة بالملزمة (لكل كلمة !!!!)
#فهم_ماكو_درخ
3- دقة الكتابة والصور عالية جداً جداً جداً
4- هُنالك بعض المعلومات تم توضيحها بشكل تفصيلي جداً (تُعتبر لدى الطالب أو الطالبة بإنها معلومات مُبهمة ومع ذلك تم توضيح هذهِ المعلومات المُبهمة بشكل تفصيلي جداً
5- الملزمة تشرح نفسها ب نفسها بس تكلك تعال اقراني
6- تحتوي الملزمة في اول سلايد على خارطة تتضمن جميع تفرُعات معلومات الجهاز الهيكلي المذكورة في هذهِ الملزمة
واخيراً هذهِ الملزمة حلالٌ عليكم وإتمنى منكم إن تدعولي بالخير والصحة والعافية فقط
كل التوفيق زملائي وزميلاتي ، زميلكم محمد الذهبي 💊💊
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Temple of Asclepius in Thrace. Excavation resultsKrassimira Luka
The temple and the sanctuary around were dedicated to Asklepios Zmidrenus. This name has been known since 1875 when an inscription dedicated to him was discovered in Rome. The inscription is dated in 227 AD and was left by soldiers originating from the city of Philippopolis (modern Plovdiv).
CapTechTalks Webinar Slides June 2024 Donovan Wright.pptxCapitolTechU
Slides from a Capitol Technology University webinar held June 20, 2024. The webinar featured Dr. Donovan Wright, presenting on the Department of Defense Digital Transformation.
Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) CurriculumMJDuyan
(𝐓𝐋𝐄 𝟏𝟎𝟎) (𝐋𝐞𝐬𝐬𝐨𝐧 𝟏)-𝐏𝐫𝐞𝐥𝐢𝐦𝐬
𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
- Understand the goals and objectives of the Edukasyong Pantahanan at Pangkabuhayan (EPP) curriculum, recognizing its importance in fostering practical life skills and values among students. Students will also be able to identify the key components and subjects covered, such as agriculture, home economics, industrial arts, and information and communication technology.
𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
-Define entrepreneurship, distinguishing it from general business activities by emphasizing its focus on innovation, risk-taking, and value creation. Students will describe the characteristics and traits of successful entrepreneurs, including their roles and responsibilities, and discuss the broader economic and social impacts of entrepreneurial activities on both local and global scales.
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
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There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
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SWOT analysis in the project Keeping the Memory @live.pptx
FACTORS AFFECTING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN KITALE TOWN TRANS-NZOIA COUNTY, KENYA
1. ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Vol. 1, Issue 3, pp: (60-75), Month: October - December 2014, Available at: www.paperpublications.org
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FACTORS AFFECTING TAX
COMPLIANCE AMONG SMALL AND
MEDIUM ENTERPRISES IN KITALE
TOWN TRANS-NZOIA COUNTY, KENYA
Chepkurui Chebusit1
, Prof. G. S. Namusonge2
, Oteki Evans Biraori3
,
Ezekiel Chirchir Kipkoech4
1
Masters, Jomo Kenyatta University of Agriculture & Technology, Box 6200 Nairobi,
2
PhD Senior lecturer, Jomo Kenyatta University of Agriculture & Technology,
3
PhD student, Jomo Kenyatta University of Agriculture & Technology,
4
Masters, Moi University.
Abstract: This study seeks to establish factors affecting tax compliance by Small and Medium Enterprises, with
special emphasis on Income Tax and Value Added Tax and their effects on government revenue. Tax compliance
level which is internal factor affecting tax revenue not only undermines tax administration infrastructure but also
makes the tax base narrow and inequitable. The objectives of the study include establishing the influence of
compliance cost, fines and penalties and attitudes of tax compliance among Small and Medium Enterprises. The
study adopts a descriptive research design involving both qualitative and quantitative research methodology. The
target population was 200, out of which a sample size of 132 respondents were drawn, using stratified and simple
random sampling. Questionnaires were used to collect primary data from the respondents, which were analyzed
using SPSS applying both descriptive and inferential analysis. There was a positive relationship between the tax
and compliance cost (r=.514), fines and penalties (r=.415) attitudes (r=.546) and tax compliance. The findings
showed that compliance cost, fines and penalties and attitude had significant relationship with tax compliance. It is
recommended that the tax system should provide a clear and simple guideline on how to fill tax returns but also
enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers,
there should be moderate levels of fines and taxes so that SMEs are encouraged to comply since they will keep
accurate records for taxation purposes in order to avoid fines and penalties.
Keywords: Direct tax, Indirect tax, Medium enterprise, Productive expenditure, tax evasion, tax impact.
1. INTRODUCTION
To date, the pervasiveness of tax noncompliance remains of serious concern to the majority of tax administrators around
the world. Tax noncompliance not only poses a serious threat to effective tax and voluntary compliance; it also has a
negative impact on the economy. In 2008/2009, Her Majesty's Revenue and Customs (HMRC) estimated the United
Kingdom tax gap to be around £42 billion, and of this, £15 billion was due to tax fraud, evasion and some criminal
activities (HMRC, 2010). Whilst the Inland Revenue Board of Malaysia (IRBM) reported that the additional taxes and
penalties of 2010 amounted to about RM1, 013.63 million of the finalized audited corporate tax cases Inland Revenue
Board of Malaysia, (IRBM, 2010). The rising tax noncompliance has urged the government and tax administrators to
examine the factors that cause tax noncompliance.
2. ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Vol. 1, Issue 3, pp: (60-75), Month: October - December 2014, Available at: www.paperpublications.org
Page | 61
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In developing countries, tax noncompliance is a serious challenge facing income tax administration and hindering tax
revenue performance. Despite the various tax reforms undertaken by governments to increase tax revenue over the years,
prior statistical evidence has proven that the contribution of income taxes to the government's total revenue remained
consistently low and is relatively shrinking (Alabede et al., 2011). However, from all the taxes, personal income tax has
remained the most disappointing, inefficient, unproductive and problematic tax system (Kiabel & Nwokah, 2009).
Compliance costs involved in taxation are major impediments to elicit compliance behaviour of taxpayers. It is also
believed by most tax policy researchers that compliance costs for tax payment are quite high especially for SMEs, which
lack knowledge and skills of the tax laws and regulation (Shome, 2004). Sometimes the administration of income tax
creates problems for business taxpayers when it imposes burdensome reporting and record keeping requirements. This has
led to increased costs of tax for those who try to comply with the tax law (Baurer, 2005). Likewise most governments in
developing economies have not adequately taken taxpayer compliance costs into account when designing tax rules, yet
such expenses fall on to the taxpayers in form of reduced work effort or saving (Bankman, 2005), time spent on tax
compliance process and monetary expenditures on salaries, overheads and seeking assistance from experts (Munnich,
2004).
Consequently, developing countries are still characterized by the low tax compliance levels, in the face of the numerous
advocacies for voluntary compliance (Ayoki, 2008). Many of their governments have adopted tax compliance
administrative measures like penalties, rates and tax audits to ensure tax enforcement instead of compliance (Kayaga,
2007). Moreover the tax regime is oriented more towards consumption taxes rather than income taxes. This has been
accompanied by lower ratio of tax revenue to GDP of (21.2%), as compared to that of Namibia (31%), Uganda (13.5%),
Mauritius (19.6%), Zambia (19.4%), Burundi (19%), Ghana (17.2), and Malawi (15.9%) in Sub-Saharan African
countries with similar tax structure in 2006/07 (Ayoki, 2008).
Besides the tax potential of the informal sector (SMEs) in developing countries is partially exploited given the fact that
most enterprises have small profits and do not keep accurate financial records (Bonjean and Chambas, 2001), hence the
tax revenue contribution made by these enterprises especially the small enterprises in terms of presumptive tax to total tax
revenue is insignificant (i.e. less than 0.5% of total tax). Although a lot has been done on tax compliance in relation with
tax rates, penalty, social norms, tax administration and tax fairness, it is not clear whether tax competencies and
compliance costs suffered by SMEs influence compliance levels. Most large companies have their roots in Small and
Medium Enterprises suggesting that the future large corporations are the Small and Medium Enterprises of today that that
must be nurtured to ensure their growth. Thus, Small and Medium Enterprises are generally perceived to be the seedbed
for indigenous entrepreneurship and generate all the many small investments, which would otherwise not have taken place
(Aryeetey & Ahene, 2004).
Taxes play an important role in the budget of any economy and one of the main reasons why the government imposes
taxes is to generate income to manage the economy and redistribute resources. Over the years, the Kenya government has
undertaken various revenue administration reforms aimed at enhancing revenue collection (Masinde and Makau, 2010).
One of the measures that have been implemented in order to increase revenue collection in Kenya was the introduction of
self-assessment systems (SAS) in 1992. The objectives of this system was to increase voluntary compliance, reduce tax
authorities‟ burden of assessing tax returns and increase tax collection efficiency (reduce tax collection costs) (Masinde
and Makau, 2010). However despite various administrative reforms, levels of tax compliance have remained quite low. A
study conducted by KRA, KIPPRA and the Treasury, based on 1999/2000 data revealed that VAT payment compliance
was as low as 55% while return lodgment compliance was 65% (Masinde and Makau, 2010).
Tax noncompliance is a substantive universal phenomenon that transcends cultural and political boundaries and takes
place in all societies and economic systems. There many studies that explain the behavior of tax compliance in a more
realistic situation. They focus on the determinants of tax compliance, respectively on economic and non-economic factors
(Nicoleta, 2011). Tax non-compliance is an area of concern for all government and tax authorities, and it continues to be
an important issue that must be addressed. Regardless of time and place, the main issue faced by all tax authorities is that
it has never been easy to persuade all taxpayers to comply with the regulations of a tax system.
3. ISSN 2349-7807
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This research therefore is aimed at evaluating the factors that encourage non-compliance with tax obligation by Small and
Medium Enterprises and consequently determine if government tax policies tops the list. In doing this, a study was
conducted using Small and Medium Enterprises in Kitale, Trans-Nzoia County, Kenya.
1.2 Statement of the Problem
Taxpayers' behavior towards tax system has evoked great attention among many Revenue Authorities in the world
especially in developed countries. However, it is debatable on what has been done towards the study of taxpayers
behavior towards tax system in developing countries as they concentrate more in studies which would increase their
budgets bottom-line in terms of huge revenue collection and enforcement efforts at the expense of studies on taxpayers
behavior which would make increase in this tax revenue to be realized and enforcement efforts work.
1.3 General Objective
To assess factors affecting tax compliance among Small and Medium Enterprises.
1.4 Specific Objectives
a) To determine the effect of compliance cost on tax compliance level
b) To assess the effect of fines and penalties on tax compliance level
c) To establish relationship between attitudes and tax compliance behaviour among Small and Medium Enterprises.
1.5 Significance and Justification of the Study
The study will help the government and/or its agents during tax policy formulation and execution.
Small and Medium Enterprises will also find this study useful in that it will help them understand the moral obligations
behind tax payment.
The study results shall also act as a useful source of information for reference purposes by students, scholars, businessmen
and other interested parties who are desirous to make sound decision upon getting informed.
1.6 Scope of the Study
The research study shall cover Small and Medium Enterprises operating in Kitale central business district. The target
population shall comprise of small and medium business enterprise operators because the problem of tax compliance is
rampant as evidenced by the absence of electronic tax register (ETR Machine) among others. The study area was most
suitable because it has the relevant, adequate and diverse target population to enable the researcher pick the sample size
required, from which to obtain desired data.
2. LITERATURE REVIEW
The definition of tax compliance in its most simple form is usually cast in terms of the degree to which taxpayers comply
with the tax law (James & Alley, 2004). Tax compliance is multi-faceted measure. The Organization for Economic
Cooperation and Development (2001) advocates that „Compliance‟ is divided into categories, considering the definition of
tax compliance. These categories are administrative compliance and technical compliance. Theoretically, it can be defined
by considering three distinct types of compliance such as payment compliance, filing compliance, and reporting
compliance (Brown and Mazur, 2003). Views of the taxpayers and tax collectors are that tax compliance means adhering
to the tax laws, which are different from one country to another.
The goal of tax administration is to foster voluntary tax compliance (Silvani, 1992) and hence reduce tax gap (difference
between taxes paid and owed for all taxes and all taxpayers) and “compliance gap.” However, tax compliance, according
to Cobham (2005), is a problem for many countries as measured by tax to GDP ratio although it has been improving for
many countries. For example, it is one-third of GDP in rich countries; Latin America and the Caribbean - 17% of GDP
and low-income countries (in Sub Saharan Africa) showed less than 15% to GDP (the recommended rate). It remains a
big challenge to low income countries. This has promoted radical tax reforms in countries like Bolivia, Uruguay,
Colombia, Jamaica and Spain with notable success (Bird & De Jantscher, 1992).
4. ISSN 2349-7807
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Tax compliance has also been segregated into two perspectives, namely compliance in terms of administration and
compliance in terms of completing (accuracy) the tax returns (Chow, 2004). Tax Compliance in pure administrational
terms therefore includes registering or informing tax authorities of status as a taxpayer, submitting a tax return every year
(if required) and following the required payment time frames. In contrast, the wider perspective of tax compliance
requires a degree of honesty, adequate tax knowledge and capability to use this knowledge, timeliness, accuracy, and
adequate records in order to complete the tax returns and associated tax documentation (Mohd et al,. 2011).
Decades of empirical work on tax compliance has produced awareness of the complexity of tax compliance and non-
compliance globally. (Masinde and Makau, 2010) point out that tax compliance itself is now recognized as multifaceted
construct. Many scholars such as Jackson et al. (1986) have put forward some explanatory variables in analysis of tax
compliance behavior. In the midst of enormous diversity, a notably consistent theme over the past two decades of tax
research has focused on identifying the costs, be they material, social or psychological, which would deter would-be
evaders and counter the lure of the benefits of evasion. A preoccupation with identifying costs and benefits with the goal
of developing a risk profile for tax collection agencies has meant that less attention has been directed towards managing
non-compliance once it has occurred (Masinde and Makau 2010). Based on the available literature, the dominant
environmental factors currently shaping the performance of revenue administrators in developing countries are
globalization, large informal sectors and limited administrative capacity. Tax policy and administrative reforms generally
have one or several of the following objectives: Increasing the equity of the tax system, creating an enabling environment
for private sector development, Increasing revenue collection or compliance. On the implementation side, the challenge to
coordinate policy reforms with parallel reforms in tax administration has rarely been fully addressed yet the menu of
administrative reform options has been greatly enriched with new approaches to organizational design, taxpayer services,
ICT solutions, human resource incentives and formal anti-corruption strategies. Compliance management is no longer
based purely on an enforcement –focused approach, but on a combination of enforcement and enhanced taxpayer services.
The issue of tax compliance is extremely important both to those concerned with the key role the increased tax yields can
play in restoring macroeconomic balance and those concerned with tax policy and its effects on the economy in general.
The level of tax collection though important is an unsophisticated measure of the effectiveness of tax administration. A
more accurate measure is the level of compliance. Facilitating compliance involves such elements as improving services
to taxpayers by providing clear instructions, easy to fill forms and assisting and educating them on their duties and
obligations. Monitoring compliance requires establishing and maintaining current accounts of taxpayers and management
information systems covering both ultimate taxpayers and third party agents such as banks involved in the tax system as
well as appropriate and prompt procedures to detect and follow up on non-filers, nil filers and delayed payments.
Deterring noncompliance requires establishing both a reasonable risk of detection as well as applying penalties
effectively. The ideal approach is to combine these measures so as to maximize their effect on compliance as it were, to
move a country from a “low compliance to a high compliance environment”(Masinde and Makau 2010).
2.1 Conceptual Framework
The research adopted a conceptual framework where factors affecting tax compliance will be taken as an independent
variable while tax compliance was itemised as dependent variable as illustrated in the Conceptual figure 2.1.
Independent variables Dependent Variable
Figure 2.1: Conceptual Framework: Factors affecting tax compliance.
2.2 Tax Compliance Cost
The costs of complying with tax obligations have generated widespread interest among academics, government policy
makers and business organizations. Contemporary research in the area was pioneered by Sandford who examined the cost
Factors affecting tax compliance
Compliance cost
Fines and penalties
Attitude and perception of traders
Tax compliance in SMEs
5. ISSN 2349-7807
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of complying with Valued Added Tax (VAT) and other taxes for taxpayers in the United Kingdom (UK) in the 1970s and
1980s (C Sandford, M Godwin and P Hardwick, 1989). Sandford (1989) defined Tax compliance costs as the costs
Acknowledging the fact that high compliance costs diminish competitiveness of the country in terms of taxation
attractiveness, public services have become increasingly interested in ways to simplify their tax legislation systems.
Slemrod and Yitzhaki (1996) identified compliance costs as one of the three components of the social costs of taxation.
These social costs can be paraphrased as costs incurred by society in the process of transferring purchasing power from
the taxpayers to the government. Administrative costs are the costs that exist besides the occurrence of compliance costs
that are borne by the companies. These costs are cited as costs that the government must also take into account as a public
cost to ensure that the tax legislation is obeyed. For example, it obtains the costs to collect taxes and to maintain the
system to collect the taxes. These are to some extent substitutable, for example when a country transfers from a system
where the tax office calculates the tax owed, to a self- assessment system. Compliance costs can be divided into three
parts: time spent, cash expenses and psychological costs. The total time spent contains employee costs (in-house staff)
and external costs (fees paid to outside accountants and other advisors). These compliance costs include costs that are
incurred by a company, but are beyond the control of its management (Hijattulah and Pope, 2008).
2.3 Fines and Penalties
Fines and penalty rates may substitute each other due to their multiplicative linkages as long as neither of them is set to
zero (Kirchler et al 2007). Higher fines simply make evading taxes more hazardous for taxpayers and should deter them
from evasion. Empirically, the deterrent effect of fines could not always be supported. The observed effects were weaker
than expected and some studies even suggest that an increase of penalties can have undesirable effect and result in more
tax avoidance (Kirchler et al, (2007). Alm et al., (1992) supports the evidence that fines do affect tax compliance though
the impact was virtually zero. From the tax administration viewpoint, researchers have concluded that compliance could
be influenced by educating taxpayers of their social responsibilities to pay and thus their intention would be to comply. As
a behavior problem, tax compliance depends on the cooperation of the public. There are greater gains in assisting
compliant taxpayers meet their fiscal obligations rather than spending more resources pursuing the minority of no-
compliers. Assisting tax payers by improving the flow and quality of information or education them (e.g., TV campaigns)
in to becoming more responsible citizens has the potential to yield greater revenue than if it were spent on enforcement
activities.
2.4 Attitude and Perceptions towards Tax Compliance
While taxpayers are influenced by the system of tax structure either to comply or not, evidence suggest that attitude and
perceptions of the taxpayer also play an important role in their compliance decisions. These involve perceptions of
government spending, perceptions on the fairness of the system, poor social influence and the ethics and attitudes towards
compliance.
3. RESEARCH METHODOLOGY
This study employed qualitative and quantitative research design that enabled collection of requisite information about the
factors that affect the tax compliance among Small and Medium Enterprises. The target population was derived from the
small scale business operators deemed knowledgeable of basic tax laws and policies such as restaurants, small scale
professional practitioners such as Lawyers, Accountants, Debt collectors, Property agents, and Telecommunication shops.
To ensure fair representation of the target population, the selection of Small and Medium Enterprises, from which to pick
samples, was done using both purposive sampling and simple random sampling. Minimum sample size of 132 respondents
was proportionately selected from the target population to participate in the study. Primary data was collected at source by
the researcher through direct communication with the respondents using questionnaires. The major sources of this data are
extracts from the Small and Medium Enterprises records, research reports and abstracts. A comprehensive questionnaire
with structured questions was administered to the respondents sampled. Data was summarized using descriptive statistics
such as mean standard deviation, frequencies and percentages, which helped in meaningfully describing the distribution of
responses. Pearson‟s correlation coefficient was used to establish relationships between variables.
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4. RESEARCH FINDINGS AND DISCUSSION
4.1 Years worked in the Small and Medium Enterprises
The more a business person is experienced the more he or she can run their Small and Medium Enterprises as shown in
Figure 4.5. From the study 46 (37.1%) of respondents, had between 6 and 10 years of working experience in the
organization, with 27.4% having between 11 and 15 years and 21% having below 5 years of experience. The findings
indicate that most of the respondents had worked in the organization for more than 6 years, experience enough to know
about tax matters.
Figure 4.1 Years worked in the Small and Medium Enterprises
4.2 Age of Business
The longer a business has been in existence the more the entrepreneur run their Small and Medium Enterprises as shown
in Figure 4.7. From the study 49 (39.5%) of respondents, identify that the business has been in existence for between 4
and 8 years, with 22.6% exist between 9 and 15 years and 17.7% in existence for more 15 years in existence. The
findings indicate that most of the respondents had been in existence for more than 4 years and hence they are likely to
know and understand taxation.
Figure 4.2 Period the business has been in existence
4.3 The Annual Turnover
From the study the 26.6% of the SMEs earned between 5,000,001 and 10,000,000, however 23.4% between 10,000,001
and 20,000,000 and 20.2% had a turnover of between 1,000,001 and 5,000,000 as shown in Table 4.1. Most of the firm‟s
83.1% had annual turnover above 1,000,001 and only 16.9% of the enterprises had an annual turnover below 1million.
The results reveal that most of the SME have their annual turnover below 20 million.
Table 4.1. The Annual Organization Turnover
Frequency Percent
0 - 1,000,000 21 16.9
1,000,001 - 5,000,000 25 20.2
5,000,001 - 10,000,000 33 26.6
10,000,001 - 20,000,000 29 23.4
20,000,001 - 50,000,000 11 8.9
Above 50,000,000 5 4.0
Total 124 100.0
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4.4 Tax Compliance
The respondents were requested to establish the extent they agree or disagree with statements relating to the tax
compliance in SMEs in Kitale. From the study descriptive statistics which included the mean, standard deviation was used
to determine the extent of tax compliance among SMEs in Kitale as summarized in Table 4.4. From the study the mean of
each statement explaining tax compliance was computed from the five likert scale and the overall mean was obtained.
After computation the mean of below 1.5 represented strongly disagree; between 1.55 and 2.45 represent disagree; a mean
ranging between 2.55 and 3.45 uncertain; with a mean of between 3.55 and 4.45 agree and any mean above 4.55
comprised of strongly agree. These findings indicated that the overall mean score of tax compliance was 2.93 indicating
that most of the respondents were not sure on compliance with respect to taxation. The respondents were not certain that
KRA had never threatened them on an outstanding bill (mean of 3.06) and paying their KRA bills first before any other
bills (2.92). Also they were not sure that they do not have an outstanding debt with KRA (2.65) and KRA had never
penalized hem when they did not pay taxes on time (2.9). From the study most of the respondents agreed that they have
never under declared income for tax assessment with a mean of 3.2, pay tax in time (3.1) and delay to pay tax KRA were
penalized (3.1). The respondents were neutral with respect to have ever given wrong reports to KRA for assessment of
their tax liability (2.67), disclose all income earned for tax purposes (2.86) and never failed to submit return to KRA
(2.83). Also they were not certain on delayed to pay taxes (2.95), pay actual tax amount assessed (2.86) and had never
attempted to avoid taxes (3.00).
Table 4.2 Tax Compliance of SMEs
Mean Std. Deviation Skewness Kurtosis
KRA has never threatened us about an
outstanding bill
3.0565 1.15683 -.080 -.628
We pay our KRA bills first before any
other bills
2.9194 1.39451 .091 -1.313
We do not have an outstanding debt with
KRA
2.6452 1.22437 .575 -.658
KRA has ever penalized us when we did
not pay taxes on time
2.8548 1.32943 -.109 -1.220
We have ever given wrong reports to KRA
for assessment of our tax liability
2.6694 1.29867 .435 -.962
We have never under declared income for
tax assessment
3.1694 1.35384 -.094 -1.293
We disclose all income earned for tax
purposes
2.8548 1.18042 .407 -.721
We never fail to submit return to KRA 2.8306 1.31731 .015 -1.263
We have never delayed to pay taxes 2.9516 1.39602 .124 -1.338
We pay actual tax amount assessed 2.8548 1.16656 -.150 -1.028
We pay tax in time 3.0565 1.31472 -.127 -1.186
When we delay to pay tax KRA penalizes
us
3.0484 1.34862 -.089 -1.253
We have never attempted to avoid taxes 2.9919 1.21973 .207 -.929
Overall mean 2.9282 .39971 .779 1.191
The tax compliance of SMEs in Kitale was found to be average, since the mean was 2.93. This agree with Terkper, (2003)
that many small and medium taxpayers do not register voluntarily, while those who do register often fail to keep adequate
records, file tax returns, and settle their tax liabilities promptly. The findings indicate that some of the SMEs were
uncertain on their compliance and concurs with Ahmed & Braithwaite (2005) that in the small business context,
opportunities for evasion are high and resources are often scarce for field auditing. Even when high investments are made
in auditing, uncovering 'hidden cash' is never going to be an easy task without an adequate audit trail.
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4.5 Relationship between compliance cost and tax compliance among Small and Medium Enterprises
Pearson Product Moment Correlation Coefficient was used to establish the relationship between compliance cost and tax
compliance among Small and Medium Enterprises as summarized in Table 4.4. There was a positive relationship between
the compliance cost (r=.514, n=124, p<.05) and tax compliance. This indicated that an increase in compliance cost the tax
compliance improves.
Table 4.3 Relationship between compliance cost and tax compliance among Small and Medium Enterprises
Tax Compliance Compliance
cost
Tax Compliance Pearson Correlation 1
Sig. (2-tailed)
Compliance cost Pearson Correlation .514**
1
Sig. (2-tailed) .000
**. Correlation is significant at the 0.01 level (2-tailed).
The findings showed that compliance cost had positive relationship with tax compliance. It agrees with Hijattulah and
Pope (2008) as costs incurred by a company, but are beyond the control of its management, hence tax compliance cost is
likely to affect tax compliance in the SMEs.
4.6 Relationship of fines and penalties on tax compliance among Small and Medium Enterprises
Pearson Product Moment Correlation Coefficient was used to establish the effect of fines and penalties on tax compliance
among Small and Medium Enterprises as summarized in Table 4.11. There was a positive effect of fines and penalties on
compliance cost (r=.415, n=124, p<.05) and tax compliance. This indicated that an increase in fines and penalty the tax
compliance improves.
Table 4.4. Effect of fines and penalties on tax compliance among Small and Medium Enterprises
Tax Compliance Fines and penalty
Tax Compliance Pearson Correlation 1
Sig. (2-tailed)
Fines and
penalty
Pearson Correlation .415**
1
Sig. (2-tailed) .000
**. Correlation is significant at the 0.01 level (2-tailed).
The observed effects were weaker than expected and some studies even suggest that an increase of penalties can have
undesirable effect and result in more tax avoidance (Kirchler et al, (2007). The higher the penalty and the potential audit
probability the greater discouragement for potential tax evasion. On the one hand fines should be high enough to decrease
the expected value of tax evasion and to assure its deterrent effect on tax payers.
4.7 Relationship between attitudes and tax compliance behaviour
Pearson Product Moment Correlation Coefficient was used to establish the relationship between attitudes and tax
compliance among Small and Medium Enterprises as summarized in Table 4.14. There was a positive relationship
between attitudes (r=.546, n=124, p<.05) and tax compliance. This indicated that an increase in attitude of SMEs the tax
compliance improves.
Table 4.5 Relationship between attitudes and tax compliance behaviour
Tax Compliance Attitude
Compliances Pearson Correlation 1
Sig. (2-tailed)
Attitude Pearson Correlation .546**
1
Sig. (2-tailed) .000
**. Correlation is significant at the 0.01 level (2-tailed).
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The attitude of SMEs towards tax influenced the tax compliance. This agrees with Eriksen and Fallan (1996) that
taxpayer's attitude towards tax system has influence on reinforced desire toward tax evasion and compliance. Chan et al.
(2000) reported that Hong Kong taxpayers have less favorable attitude towards tax system as a result lower level of
compliance. Business owners are often mentioned as a high-risk group in terms of tax compliance because their
opportunities to evade are high. Also it agrees with Oriviska and Hudson (2002) that attitudes to tax evasion are
condoned by large number of people who are particularly benefiting from it.
4.8 Model Summary on Tax Compliance
The R2
represented the measure of variability in tax Compliance that is accounted for by the predictors (independent
variables which include fines and penalties, compliance cost and attitude). From the model, (R2
= .635) shows that all the
predictors account for 63.5% variation in tax Compliance (Table 4.15).
Table 4.6 Model Summary on Tax Compliance
Model R R
Square
Adjusted
R Square
Std. Error
of the
Estimate
R Square
Change
F
Change
df
1
df2 Sig. F
Change
Durbin-
Watson
1 .797a
.635 .623 .19690 .635 51.796 4 119 .000 1.687
The value of adjusted R2
was .623, showing that the prediction of tax compliance account for approximately 62.3% less
variance. The change statistics were used to test whether the change in adjusted R2
is significant using the F ratio. The
model caused adjusted R2
to change from zero to .635 and this change gave rise to an F ratio of 51.80, which is
significant at a probability of .05.
4.9 Analysis of Variance on Tax Compliance
The analysis of variance was used to test whether the model could significantly fit in predicting the outcome than using
the mean as shown in (Table 4.7). The F- ratio represents the ratio of improvement in prediction that results from fitting
the model, relative to the inaccuracy that exists in the model. The F- ratio was 51.80 which is likely to happen by chance
and was significant (P<.05). The model significantly improved the ability to predict the tax compliance. Thus the model
was significant. This represented the effect size of the regression model and was significant with a p-value of 0.000.
Table 4.7 Analysis of Variance on Tax Compliance
Model Sum of Squares df Mean Square F Sig.
1 Regression 8.032 4 2.008 51.796 .000b
Residual 4.613 119 .039
Total 12.646 123
The regression results in table 4.8 show that each of the predicted parameters in relation to the independent factors were
significant with fines and penalty contributing 88%, attitude 28.7% and Compliance cost 26.7 % to tax compliance.
Table 4.8 Coefficients on Tax Compliance
Model Un Standardized
Coefficients
t Sig. Collinearity Statistics
standardized Coefficients
B Std.
Error
Beta Tolerance VIF
1 (Constant) -0.057 0.219 -0.26 0.795
Fines and
penalty
0.088 0.025 0.212 3.506 0.001 0.839 1.192
Compliance
cost
0.268 0.065 0.256 4.128 0 0.799 1.251
Attitude 0.287 0.056 0.315 5.132 0 0.813 1.23
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5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Relationship between compliance cost and tax compliance among Small and Medium Enterprises
From the study the overall tax compliance cost were found to be average with a mean of 2.82 and standard deviation 0.33.
There was a positive relationship between the compliance cost (r=.514, n=124, p<.05) and tax compliance. This indicated
that an increase in compliance cost the tax compliance improves. The findings showed that compliance cost had positive
relationship with tax compliance.
5.2 Relationship between fines and penalties on tax compliance among Small and Medium Enterprises
From the study the fines and penalty factor was rated average by the respondents in influencing SMEs tax compliance.
There was a positive effect of fines and penalties on compliance cost (r=.415, n=124, p<.05) and tax compliance. This
indicated that an increase in fines and penalty the tax compliance improves. The higher the penalty and the potential audit
probability the greater discouragement for potential tax evasion.
5.3 Relationship between Attitudes and Tax Compliance Behaviour among Small and Medium Enterprises
The findings on attitudes and tax compliance behaviour among Small and Medium Enterprises was found to have a mean
of 2.95. There was a positive relationship between attitudes (r=.546, n=124, p<.05) and tax compliance. This indicated
that an increase in attitude of SMEs the tax compliance improves. From multiple linear regression model (R2
= .635)
shows that all the predictors account for 63.5% variation in tax Compliance. The model significantly improved the ability
to predict the tax compliance. The findings showed that tax competence, compliance cost, fines and penalties and attitude
had significant relationship with tax compliance.
5.4 Conclusion
These study findings provide direct evidence that there was significant influence of tax compliance cost, fines and penalty
and attitudes on tax compliance. The fines and penalties play a vital role in improving tax compliance.
5.5 Recommendations
i. The study finds strong support for the argument that fines and penalties impacts highly on tax compliance, thus there
should be moderate levels of fines and taxes to employ. This way, SMEs will be encouraged to comply since they
will keep accurate records for taxation purposes in order to avoid fines and penalties.
ii. Tax compliance cost had a profound effect on tax compliance. The findings suggest tax systems with low tax
compliance costs are most likely to be complied with. Therefore, the tax compliance cost should be in a way that
does not encourage taxpayers to evade tax.
iii. Attitude of tax has a significant influence on tax compliance, therefore the tax system should target individuals at all
levels of income to seal loopholes that may encourage tax evasion.
iv. Tax systems should also enhance surveillance and monitoring to ensure that all the taxpayers are brought into the tax
net.
5.6 Further Research Recommendations
In future, researchers should replicate this study to cover the whole country. A study on the self-assessment system can
also be carried out to determine its effectiveness on enhancing tax compliance levels. Further the study should also put
into consideration the influence of Economic conditions on tax compliance.
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