Abstract:
Tax compliance has remained a major issue across the world with adverse effect of the
growth of economies. The consistent failure of the KRA to meet tax revenue projections
and targets has sparked debate on factors contributing to tax compliance. The available
literature provides evidence that extrinsic factors play an important role in tax
compliance behavior among the tax payers. The study sought to establish the
moderating role of government facilitation in the relationship between extrinsic factors
and tax compliance among Small and Medium Enterprises in Kisumu County, Kenya.
The specific objectives of the study included: to establish the moderating effect of
government facilitation between social norms and tax compliance among Small and
Medium Enterprises in Kisumu County, to determine the moderating role of
government facilitation between culture and tax compliance among Small and Medium
Enterprises in Kisumu County, to assess the moderating effect of government
facilitation on tax morale and tax compliance among Small and Medium Enterprises in
Kisumu County, Kenya and to find out the moderating effect of government facilitation
in the relationship between extrinsic factors and tax compliance among Small and
Medium Enterprises in Kisumu County, Kenya. The study adopted a descriptive
research design and it shall be carried out in Kisumu County. The study targeted 3162
SMEs and respondents were owners/managers of these firms. The study used stratified
random sampling to select 342 respondents as the sample size. Primary data was
collected with the help of questionnaires and the analysis was done using descriptive
(means and standard deviations) and inferential statistics (correlation and regression
analysis). The findings were presented using tables and figures. The study revealed
that social norms and tax morale have significant effect on tax compliance with the
moderation of government facilitation. The study concludes that extrinsic factors have
significant effect on tax compliance with the moderation of government facilitation.
The study recommends that there is need to tax authorities and officials to understand
and appreciate the role played by social norms as far as encouraging tax compliance
among tax payers is concerned. There should be an increase in accountability of the
amount of taxes collected so that the tax payers gain morale in paying taxes hence
compliance. Efforts should be put in place of providing incentives as well as increasing
the number tax centers where tax payers can easily access to seek for assistance as far
as tax matters are concerned.
