Effect of personal and non-personal factors on tax evasion among Small and Medium Enterprises in Nairobi County, Kenya
Date
2019
Authors
Ndichu, Ruth
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Tax evasion affects various sectors of an economy and heaps adverse effect on an economy as a whole. This study assessed the effect of personal and non-personal factors on tax evasion among SMEs in Nairobi County. The specific objectives of the study were to establish the effect of tax rates on tax evasion among SMEs in Nairobi County; the effect of economic factors on tax evasion among SMEs in Nairobi County; and the effect of demographic factors on tax evasion among SMEs in Nairobi County, Kenya. The study adopted a descriptive research design. This study collected primary data from the field using questionnaires. Descriptive analysis was done where measures of central tendencies (frequencies, means and percentages) were used to carry out the analysis. Inferential statistics including correlational analysis and regression analysis were also used. It was established that tax rate has moderate, positive and significant effect on tax evasion. Economic factors have strong, positive and significant effect on tax evasion. Demographic factors have strong, positive and significant effect on tax evasion. The study concluded that tax rate, economic factors and demographic factors are key drivers of tax evasion among SMEs. The study recommends that the Kenya Revenue Authority (KRA) should come up with innovative ways of collecting revenue without necessarily raising the rates. The government should come up with sound economic policies (including macro and micro economic policies) which would increase the taxpayers ' incomes hence more taxes. KRA should consider the male and female attributes when designing taxation policies. Penalties for noncompliance may be more stringent to men as compared to women due their differences in willingness to comply with taxes.
Description
A Thesis submitted in partial fulfillment of the requirements for the award of the Degree of Masters of Business Administration at Strathmore University Business School
Keywords
Tax evasion, Small and Medium Enterprises_Nairobi County, Kenya, Tax rates