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ABSTRACT
Taxation on rental income by the Kenya Revenue Authority has been in existence
since implementation of income tax act of 1973. However, majority of commercial
property owners have not been complying with the Act due to lack of government
mechanisms to identify and bring landlords into the tax net. The key aim of the study
was to find out determinants of tax compliance among commercial property owners in
Dagoretti North Nairobi County, Kenya. The specific objectives were to establish the
effect of taxpayer education, system automation and enforcement measures on tax
compliance among commercial property owners in Dagoretti North Nairobi County
while Age and Gender were used as a Control variable. The choice of Dagoretti
North, Nairobi was due to the high number of commercial properties. The study was
anchored on the following theories: Ability to pay Theory, Theory of Technology
Acceptance, fiscal exchange theory and Economic Deterrence Theory. The study
adopted an explanatory research design. The target population was 4021 commercial
property owners in Dagoretti North, Nairobi County. A sample size of 433 was drawn
from this population using Yamane‟s formula. The study used primary data, collected
through questionnaires administered through a drop and pick later method. The data
collected was analyzed using both descriptive and inferential statistics. Multiple linear
regression model was used to establish the strength of the relationship between
independent and dependent. The study found that Tax payer education had a positive
and significant effect on tax compliance among commercial property owners in
Dagoretti North, Nairobi County β1 = .355 p = 0.002<0.05. The study also found that
System automation had a positive and significant effect on tax compliance among
commercial property owners in Dagoretti North, Nairobi County β2 = .614 p =
0.000<0.05. Further the study found that enforcement had a positive and significant
effect on tax compliance among commercial property owners in Dagoretti North,
Nairobi County β3 = .305 p = 0.000<0.05. The study finally found that Age and
Gender had a positive and statistically significant control effect on the relationship
between tax payer education, system automation, enforcement measures, and tax
compliance among commercial property owners in Dagoretti North, Nairobi County.
The study recommends that KRA and the government should adopt and implement
policiespo that put more emphasis on ssystems automation.tax payer education and
enforcement measures, in order to enhance tax compliance .It is recommended that
academic institutions and research organizations such as KESRA should conduct
further studies. It was recommended that further research should be conducted using
other variables such as influence of compliance cost on rental income tax compliance. |
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