Effect of Tax Knowledge on Pay As You Earn Tax Compliance Among Small and Medium Enterprises in Thika Town, Kenya
Keywords:
Tax Knowledge, Pay As You Earn Compliance, Small and Medium EnterprisesAbstract
The government is unable to adequately raise revenue through tax collection to effectively provide for the essential needs of its citizens which include education, healthcare, water, security, roads, and social security among others. This has raised a concern as the Government seeks to achieve its revenue targets hence the need for this study. The study looked at tax knowledge and Pay As You Earn compliance among small and medium enterprises in Thika town Kenya. The study was supported by The Attribution Theory. The study adopted an explanatory research design. The study aimed to focus on Small and Medium Enterprises licensed in Thika town. The target population was 1223 small and medium enterprises with a sample size of 301 small and medium enterprises with a response rate of 83%. Primary data was collected using structured questionnaires. Both descriptive statistics and inferential statistics were carried out. The study found that there is a positive and significant effect of tax knowledge on PAYE tax compliance (β1 =0.332, p<0.05), The study recommends that KRA should therefore work towards simplifying and streamlining the tax compliance processes, reducing unnecessary administrative burdens. Future research should be carried out to determine the effect of tax incentives on TAX compliance.
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Copyright (c) 2024 Chebet Milka Bett, Dr. Ogaga Bruce, PhD, Dr. Limo Patrick, PhD
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