Abstract:
Taxation is a major source of revenue for the Government. Therefore, taxpayers in
Kenya are required to comply with various laws set aside by the Kenyan Government
when it comes to payment of taxes. This study sought to determine the factors affecting
Residential Rental Income Tax compliance among property owners in Gatundu South,
Kiambu County, Kenya. The specific objectives of this study were to determine the
effect of automation of service on Residential Rental Income Tax compliance among
property owners in Gatundu south, to establish the effect of taxpayer perception on
Residential Rental Income Tax compliance among property owners in Gatundu south,
to determine the effect of tax audits on Residential Rental Income Tax compliance
among property owners in Gatundu south, To establish the effect of stakeholder
sensitization on Residential Rental Income Tax compliance among property owners in
Gatundu south. The theories that supported this study were Economic deterrence
theory, Theory of Technology Acceptance, Ability to Pay Theory and Fiscal Exchange
Theory. A descriptive research design was adopted. The target population comprised
1298 residential property owners in Gatundu South. A sample size of 297 respondents
was selected using a random sampling technique. The primary data was collected by
the use of questionnaires. The results revealed that Automation of services, taxpayer
perception, tax audit and stakeholder sensitization caused a variation of 61.9% (𝑅
2
=0.619) Regression analysis was conducted and the findings revealed that automation
of services on Residential Rental Income Tax compliance was statistically significant
with (β1) of 0.229 and p value of 0.002 which is less than 0.05. Taxpayer percetion on
Residential Rental Income Tax compliance was statistically significant with (β2) of
0.390 and p value of 0.001 which is less than 0.05 . Tax audit on Residential Rental
Income Tax compliance was statistically significant with (β3) of 0.287 and p value of
0.000 which is less than 0.05. While stakeholder sensitization on Residential Rental
Income Tax compliance was statistically significant with (β4) of 0.204 and p value of
0.000 which is less than 0.05. The study then concluded that on automation of services,
taxpayer perception, tax audit and stakeholder sensitization that all independent
variables had a significant relationship with rental income tax compliance. The study
recommends that policy maker should formulate policies that can improve compliance
levels of tax payments by Kenyan property owners. This will help the government raise
more domestic revenue from tax collection which will be used in realizing the
government’s goals. Further studies may be conducted to determine the effect of
compliance cost on residential rental income tax compliance.