Factors affecting residential rental income tax compliance among property owners in Kenya; case of Gatundu South, Kiambu County

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.