Abstract:
Tax compliance entails taxpayers' decision to comply with tax laws and regulations by
paying tax timely and accurately. Tax compliance is an integral component of fiscal
policy and administration in any economy and taxation influences the operations of the
National Government and the grass roots. It is the fuel of every government as it is the
main instrument through which government funding is ensured. Technology involves
enormous opportunities for regulatory authorities on tax compliance to enforce the
noncompliance by the SME. The main objective of this study was to examine the effect
of technology adoption on tax compliance among small and medium enterprises in
Eldoret CBD, Kenya. This study was guided by the following specific objectives; To
determine the effect of perceived ease of use of technology on tax compliance, to
examine the effect of ICT user skills on tax compliance, to investigate the extent to
which perceived usefulness of technology affect tax compliance, to determine the effect
of electronic tax filing system cost on tax compliance and to determine the effect of
ICT infrastructure on tax compliance by small and medium enterprises in Eldoret CBD.
This study is anchored on the Technology Acceptance Model (TAM), Diffusion of
Innovation (DOI) theory and Unified Theory of Acceptance and use of Technology.
The study area was Eldoret CBD, Uasin Gishu County. This study adopted an
explanatory research design. The study yielded quantitative research. The target
population for this study comprised of 320 owners/managers from the 320 small and
medium enterprises (SMEs) operating within Eldoret central business district in Uasin
Gishu County. The sample size for this study was 178 SMEs. Primary data was
collected using questionnaires. Data was analyzed using descriptive and inferential
statistics. Descriptive statistics was analyzed through measures of central tendency such
as mean and standard deviation while inferential statistics such as Pearson Correlation
Coefficients and Multiple regression models were used. The regression analysis results
indicated that perceived ease of use of technology (β1 = 0.222, P = 0.000 <0.05),
perceived usefulness (β2= 0.156, P = 0.000 < 0.05) and ICT infrastructure β5 = 0.209,
P=0.000 had a positive impact on tax compliance while ICT user skills and electronic
tax filing system cost were not significant. The study concludes that a combination of
technology adoption aspects including perceived ease of technology, perceived
usefulness and ICT infrastructure are necessary for enhancing tax compliance in the
SMEs, whereas ICT skills and electronic tax filing system cost do not influence tax
compliance in the SMEs. The study recommends that adequate measures related to
technology should be availed to the SMEs in Eldoret CBD and the country at large and
also the need by the government to develop policies that guide on technology adoption
in relation to tax compliance and related procedures.