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Tax Compliance concerns are as old as taxes themselves and will remain an area of
discovery as long as taxes exist. Taxes are the biggest source of revenue for
governments to finance development. Poor tax knowledge has a number of potentially
serious implications, mainly it can certainly affect tax compliance. There is therefore
the need to establish whether a bridge in the knowledge gap would result in enhanced
compliance. This study sought to address this gap by establishing the effect of taxpayer
education on tax compliance among MSEs in Kenya. Specifically, the study
endeavoured to determine the influence of taxpayer education programs on tax
compliance, establish the effect of tax knowledge on tax compliance, assess the effect
of use of technology on tax compliance and investigate if taxpayer’s profile affects tax
compliance. The independent variable was taxpayer education whilst the dependent
variable was tax compliance. The study explored the theory of reasoned action,
economic deterrence theory, and the social influences theory to explain the concept of
tax compliance and the various motives behind tax non-compliance. The study was
conducted in Migingo Block - (Nairobi’s Riveroad and Kamukunji areas) Nairobi
county as classified by KRA. The target population was 612 taxpayers with a sample
size of 242. Data was analysed using both descriptive and inferential statistics. The
study also used regression analysis to establish the relationship between the
independent and dependent variables. The study revealed that taxpayer education
programs influence tax compliance positively (β=0.402, p =0.007). In addition, tax
knowledge influences tax compliance positively (β=0.402, p=0.005). Further, use of
technology has a positive and significant effect on tax compliance (β=0.376, p=0.002).
Finally, taxpayer’s profile had a positive and significant effect on tax compliance
(β=0.227, p=0.003). The study concluded that taxpayer education programs, tax
knowledge, use of technology, taxpayer’s profile influence tax compliance which is
proved by the R square of 0.610, thereby rejecting the null hypotheses. The study
findings forms a new body of knowledge in the stated objectives. The results also form
a platform for relevant policy advocacy and change and empower taxpayers to know
more and articulate their rights regarding tax compliance. The study concluded that
taxpayer education affected tax compliance among MSEs in Kenya. Specifically, the
study concluded that taxpayer education programs, tax knowledge, use of technology,
taxpayer’s profile affected tax compliance positively. Further, the study concluded that
improved taxpayer education would help to improve tax compliance. The study
recommends further studies focusing on specific types of taxes such as VAT,
Presumptive tax performance should be conducted. This would help to determine the
difference of effect tax education on each of their performances compared to tax
compliance. Further, studies focusing custom duties tax payers should be conducted since they were not targeted in this study. This would help to make comparisons. |
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