Effect of Taxpayer Knowledge on Turnover Tax Compliance among Small and Medium Enterprises in Kariokor Market in Nairobi, Kenya

Abstract

Turnover Tax (TOT) compliance among, small, and medium enterprises (SMEs) in Kenya has faced considerable challenges, with tax collection falling short of targets. This study investigates the effect of taxpayer knowledge on Turnover Tax compliance among small, and medium enterprises in the Kariokor market in Nairobi, Kenya. This study adopted an explanatory research design. The target population for the study was 1382 Turnover Tax registered SMEs in Kariokor Market in Nairobi. Data was analyzed using descriptive and inferential statistics. The findings revealed that taxpayer knowledge exhibited a positive influence on Turn Over Tax Compliance (β = 0.203, p = 0.007), indicating that as tax knowledge among taxpayers increases, their compliance with tax regulations also tends to increase. The research established that there is a positive connection between taxpayer knowledge and turnover tax compliance. When taxpayers possess greater knowledge of tax regulations and procedures, their compliance levels increase. KRA should invest in taxpayer education programs to improve knowledge and awareness among SMEs. This will empower business owners to navigate the tax system more effectively and ensure voluntary compliance.