MCOM Theses and Dissertations (2016)

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Browsing MCOM Theses and Dissertations (2016) by Author "Limisi, Ebby A. Mutaka"

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    Optimal measures for minimizing the tax audit expectation gap in Kenya
    (Strathmore University, 2016-06) Limisi, Ebby A. Mutaka
    The purpose of this study was to find out whether a tax audit expectation gap exists between the tax authority and corporate tax payers. Specifically, the study sought to: establish the existence of the tax audit expectation gap between the tax authority and corporate tax payers; establish whether the use of better tax compliance standards is a measure of reducing the tax audit expectation gap between tax authority and corporate tax payers; establish whether forensic accounting acts as a measure of reducing the tax audit expectation gap between the tax authority and corporate tax payers; find out whether I-tax implementation acts as a measure of reducing the tax audit expectation gap between tax authority and corporate tax payers. The study used a descriptive research design and used primary data collected using questionnaires. This study used the stratified random sampling method. In order to assess whether unreasonable expectations exist in Kenyan tax audit engagements, the study analyzed responses from both tax managers and corporate tax payers using the Chi-square and the Fisher Exact test. In addition, a binary logistic regression model was used to test the significance of the influence of the independent variables on the dependent variable. The data was presented using tables, graphs and charts. The study findings confirmed that, indeed, a tax audit expectation gap existed between corporate tax payers and the tax authority. In addition, better tax compliance standards, forensic accounting, I-tax implementation and user education were found to be important measures in narrowing this tax audit expectation gap. The study concluded that: a tax audit expectation gap exists between the tax authority and the corporate tax payers; unreasonable expectations contribute to the tax audit expectation gap between the tax authority and the corporate tax payers; the tax man’s substandard performance contributes to the tax audit expectation gap between the tax authority and the corporate tax payers; introduction of better tax compliance standards, forensic accounting, I-tax implementation and user education can be useful measures in narrowing the tax audit expectation gap between the tax authority and the corporate tax payers. The study recommended that the Kenya Revenue Authority should maintain consistency in updating better tax compliance standards, use forensic accounting, implement I-tax and equip the corporate tax payers with taxation information so as to reduce the tax audit expectation gap.