Effects of Online Tax Management on Complance Levels of Among Micro And Small Enterprises In Nakuru Town, Kenya

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Effects of Online Tax Management on Complance Levels of Among Micro And Small Enterprises In Nakuru Town, Kenya

Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 3

Abstract

Taxation is the main source of revenue for governments. Therefore, taxation plays a significant role in facilitating governments to provide services to its citizens, investment in infrastructure, economic growth and equitable distribution of resources. It is therefore important that a country generates the highest possible revenues from its economy. To achieve this, it is critical that tax agencies bring on board all eligible taxpayers in order to ease the burden of taxation on individuals. SMEs form the largest portion of economies especially in the developing world and operate largely in the informal sector therefore challenging governments’ means in ensuring tax compliance. The Kenya Revenue Authority in order to enhance compliance has embraced the use of information technologies in taxing SMEs. However it is not known to what extent the use of information technology has contributed in enhancing Value Added Tax compliance. The study sought to assess the impact of information technology on compliance to value added tax among small taxpayers by surveying of small scale traders in Nakuru Town, Kenya. Specific objectives were: to assess how the use of electronic tax registers influence VAT compliance among Small Scale Traders in Nakuru Town; to analyze the effects of online tax filling on VAT compliance among Small Scale Traders in Nakuru Town and to determine the effects how electronic taxpayer information sharing on VAT compliance among Small Scale Traders in Nakuru Town. This research utilized the descriptive survey and aimed to get data by qualitative and quantitative technique. The target population for this study comprised of the operators of informal enterprises in Nakuru Central Business District. The study sample size was therefore made of 100 SMEs in Nakuru Town. The data collection instrument used was a structured questionnaire having simple, clear questions issued to the respondents. Secondary data was also obtained from KRA Nakuru Branch. The data collected was first cleaned in preparation for analysis. The data collected was subjected to descriptive method of analysis in terms of means and percentages. The results were then presented by means of tables and charts for ease of understanding. The study concluded that more than half of SMEs within Nakuru town have registered their businesses for VAT with KRA. However, only a few of the business have an electronic tax register machine which is calibrated by KRA, less than half of the businesses surveyed were registered with KRA online i-tax platform as taxpayers. Most of the registered businesses did it in 2016 and just a few in 2017. The study recommended that the government and KRA should encourage most SMEs to use the online (i-tax) platform to register as tax payers as it is easier and less time consuming, they will not be required to spent time going to KRA to file their returns.

Authors and Affiliations

Robinson Mariita, Makanga Aineah

Keywords

Tax Compliance Online Tax Management Micro and Small Enterprises

EP ID EP409889
DOI 10.9790/487X-1907034956.
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