Social Determinants of Tax Compliance Among Small and Medium Enterprises in Kanduyi Sub-County, Bungoma County, Kenya
Main Article Content
Keywords
Gender, education level, tax compliance, SMEs
Abstract
Due to their historical role as the primary engine of production development and job creation in both established and emerging economies, small and medium-sized businesses are crucial for economic growth. Therefore, it is crucial that small and medium enterprises adhere to governmental tax laws. However, due to inefficient and incompetent tax administration, Kenya is included among the nations with the lowest tax compliance. According to KRA, the majority of SMEs do not pay taxes, and the rate of tax evasion among SMEs is still quite high. It was therefore important to investigate the factors that determine tax compliance among SMEs. The aim of this study was to determine the social determinants of tax compliance among SMEs in Kanduyi Subcounty. The study specifically aimed to ascertain the impact of gender and education level on tax compliance among SMEs. The Theory of Planned Behavior served as the study's foundation. An explanatory research design was employed in this study. The target population was 254 SMEs operating in Kanduyi Sub County. Simple random sampling method was used to select a sample size of 155 SMEs. The respondents' information was gathered using a standardized questionnaire. Pilot research involving 39 SME owners was carried out in Kakamega County. The study employed the experts' judgment approach to ascertain the validity of the research questionnaire. The Cronbach Alpha coefficient was used to determine reliability, with a 0.7 cutoff point. Collected data was analysed descriptively and inferentially using Statistical Packages for Social Sciences (SPSS). The results revealed that there was a strong and significant correlation between gender and tax compliance (r=0.601, p=0.000) and tax compliance and educational attainment (r=0.697, p=0.000). Further, results indicated that gender β=0.165, p=0.004) and educational level (β=0.287, p=0.000) had a positive and significant effect on tax compliance among SMEs. The study made recommendations that the management of KRA should reach out to the owners and managers of SMEs to encourage them to be more tax complaint by addressing the social backgrounds that discourage tax compliance through more educational programs to society leaders, reaching out more to male owners and also teaching religious leaders on the benefits of tax compliance.
References
Ajzen, I. (1991). The theory of planned behavior. Organizational behavior and human decision processes, 50(2), 179-211.
Alm, J. (2019). What motivates tax compliance?. Journal of economic surveys, 33(2), 353-388.
Alm, J., & Malézieux, A. (2019). The impact of experimental and individual variables in Tax Evasion Games. Working Paper.
Chesters, J., & Daly, A. (2017). Do peer effects mediate the association between family socio‐economic status and educational achievement?. Australian Journal of Social Issues, 52(1), 63-77.
D’Agosto, E., Manzo, M., Pisani, S., & D’Arcangelo, F. M. (2018). The effect of audit activity on tax declaration: Evidence on small businesses in Italy. Public Finance Review, 46(1), 29-57.
D’attoma, J. W., Volintiru, C., & Malézieux, A. (2020). Gender, social value orientation, and tax compliance. CESifo Economic Studies, 66(3), 265-284.
D’attoma, J., Volintiru, C., & Steinmo, S. (2017). Willing to share? Tax compliance and gender in Europe and America. Research & Politics, 4(2), 2053168017707151
Defitri, Y. S., & Fauziati, P. (2018). The effect of demographic factors and e-filling usage on tax compliance. International Journal of Engineering & Technology, 7(3.25), 156-158.
Erul, R. D. (2020). Socio-Economic Variables and Tax Compliance in the Scope of Fiscal Sociology: A Research on the European Union and OECD. The Journal of Social Science, 4(7), 1-17.
Fishbein, M., & Ajzen, I. (1974). Attitudes towards objects as predictors of single and multiple behavioral criteria. Psychological review, 81(1), 59.
Jalil, A., & Remali, A. M. (2021). Does Education Influence Tax Compliance?. Global Business & Management Research, 13.
Kabisa, K. N., Kirwa, T., & Atandi, F. A. (2023). Technological Tax Reforms and Compliance among Small and Medium Enterprises in Bungoma County, Kenya. Journal of International Business, Innovation and Strategic Management,
7(2), 1-11.
Kenimak, S. R. (2019). Effects of demographic characteristics on tax compliance among small and medium enterprise owners along Ronald Ngala Street, Nairobi.
Keraro, J. (2017). Determinants of tax compliance among small and medium enterprises in nakuru central business district, Kenya (Doctoral dissertation, Kabarak University).
Mannan, D. K. A. (2020). Socio-economic factors of tax compliance: An empirical study of individual taxpayers in the Dhaka zones, Bangladesh. The cost and Management, 48(6).
Moore, M., & Prichard, W. (2020). How can governments of low-income countries collect more tax revenue? (pp. 109-138). Springer International Publishing.
Mwaura, E. G. (2019). Determinants of Tax Compliance among Small Scale Businesses in Thika Town (Doctoral dissertation, United States International University-Africa).
Nduruchi, G. M., Gregory, E. N. M. P. P., & Namusonge, S. (2017). Determinants of tax compliance among small and medium enterprises in Bungoman County, Kenya. system, 9(18).
Nicholson, R. (2019). Religiosity and tax compliance: a practical study in New Zealand.
Ogoun, S., & Ekpulu, G. A. (2020). Educational level and tax compliance: empirical evidence from Nigeria.
International Journal of Accounting and Financial Reporting, 10(1), 160-176.
Oladele, R., Aribaba, F. O., Ahmodu, A. L. O., Yusuff, S. A., & Alade, M. (2019). Tax enforcement tools and tax compliance in Ondo State, Nigeria. Academic Journal of Interdisciplinary Studies, 8(2), 27.
Olaniyi, T. A., & Akinola, B. (2020). National culture and tax performance in Africa. Ekonomski horizonti, 22(1), 3-15.
Omondi, N. M. (2020). Factors affecting turnover Tax Compliance among Small and Meduim Enterprises in Kenya.
Raczkowski, K., & Mróz, B. (2018). Tax gap in the global economy. Journal of Money Laundering Control, 21(4), 567-583.
Schoon, I., & Cook, R. (2021). Can individual agency compensate for background disadvantage? Predicting tertiary educational attainment among males and females. Journal of youth and adolescence, 50, 408-422.
Sebele-Mpofu, F. Y., Gomera, D., & Sibanda, B. (2022). Tax incentives: A panacea or problem to enhancing economic growth in developing countries.
Slemrod, J., & Boning, W. C. (2018). Real Firms in Tax Systems. Finanz-Archiv: Zeitschrift für das Gesamte Finanzwesen, 74(1), 131-143.
Subramaniam, M. (2019). The impact of social factors on individual tax compliance. Asia Proceedings of Social Sciences, 4(3), 26-28.
Tan, S. K., Lau, C., Kassim, A. A. M., & Mohd, M. F. (2021). The moderating effect of individual taxpayers’ education level on ethical perception and tax compliance behaviour in Peninsular Malaysia. International Journal of Academic
Research in Accounting Finance and Management Sciences, 11(1).
Tilahun, M. (2018). Economic and social factors of voluntary tax compliance: Evidence from Bahir Dar City. International Journal of Accounting Research, 6(2), 182-188.
Tilahun, M. (2018). Economic and social factors of voluntary tax compliance: Evidence from Bahir Dar City. International Journal of Accounting Research, 6(2), 182-188.
Vincent, O., Stevenson, A., & Owolabi, A. (2023). Do sociodemographic characteristics of SME Entrepreneurs influence their tax (non) compliance behaviour?. Journal of Economic Criminology, 100008.
Yimam, S., & Asmare, F. (2020). Gender and Tax Compliance: Firm Level Evidence from Ethiopia.
Article Sidebar
Article Details
Isaac W. Simiyu , Department of Account & Finance, School of Business and Economics, Moi University, P.O. Box 3900-30100, Kesses, Eldoret, Kenya
Department of Account & Finance, School of Business and Economics, Moi University,Eldoret, Kenya
John Tarus, Department of Account & Finance, School of Business and Economics, Moi University, P.O. Box 3900-30100, Kesses, Eldoret, Kenya
Department of Account & Finance, School of Business and Economics, Moi University, Eldoret, Kenya
Marion Nekesa , Department of Account & Finance, School of Business and Economics, Moi University, P.O. Box 3900-30100, Kesses, Eldoret, Kenya
Department of Account & Finance, School of Business and Economics, Moi University, Eldoret, Kenya