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Research Paper | Finance | Kenya | Volume 8 Issue 7, July 2019

Tax Compliance and Level of Tax Collection among Small and Medium Size Enterprises in Kiambu County, Kenya

Jackline Wasilwa | Dr. Fredrick W.S. Ndede | Dr. Mungai J.N.

Abstract: This study looked into the relationship between tax compliance and level of tax collection among small and medium size enterprises in Kiambu County, Kenya. Specifically, the study sought to establish the effect of tax registration, declaration of income, prompt payment of tax due and filing of returns on the level of tax collection among small and medium size enterprises in Kiambu County, Kenya. A descriptive survey design was used for the study. The study was limited to SMEs operating in Kikuyu Sub County of Kiambu as the study units. Secondary data was collected for the SMEs from the annual fiscal records of Kenya Revenue Authority for a period of 5 years between 2013 and 2017. In analyzing the quantitative data, the study used descriptive statistics that included percentages and frequencies. The analysis of the data was made with the help of Statistical Package for Social Sciences (SPSS version 23.0). Multiple regression analysis was used to establish the relationship among the study variables. The results of the study indicated that there existed a positive and significant relationship between tax registration and the level of tax collection among SMEs in Kikuyu Sub County (=0.681, p-value=0.007) ; a positive and significant relationship between declaration of income and the level of tax collection among SMEs in Kikuyu Sub County (=0.707, p-value=0.001; a positive and significant relationship between prompt payment of tax due and the level of tax collection among SMEs in Kikuyu Sub County (=0.782, p-value=0.000 and a positive and significant relationship between filing of returns and the level of tax collection among SMEs in Kikuyu Sub County (=0.729, p-value=0.000. Inflation was found to have a positive moderating effect on the relationship between tax registration, declaration of income, prompt payment of tax due as well as filing of returns and the level of tax collection among SMEs in Kikuyu Sub County. The study thus concluded that tax registration, declaration of income, prompt payment of tax due and filing of returns were predictors of the level of tax collection among SMEs in devolved units in Kenya. To enhance the level of tax collection among SMEs, the study recommends that the Kenya Revenue Authority should encourage tax registration, declaration of income, prompt settlement of tax due and filing of returns in this category of businesses.

Keywords: Declaration of Income, Filing of Returns, Prompt Payment of Tax Due, Tax Registration, Tax Compliance, Tax Collection, Small and Medium Size Enterprises

Edition: Volume 8 Issue 7, July 2019,

Pages: 635 - 643

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