Effect of Systems Automation on Turnover Tax Compliance Among Small and Medium Enterprises in Eldoret City, Kenya
DOI:
https://doi.org/10.70619/vol6iss2pp1-17-752Keywords:
Systems Automation, Turnover Tax Compliance, Small and Medium EnterprisesAbstract
Systems automation has emerged as a key driver of efficiency and transparency in tax administration processes. In Kenya, these technological advancements are particularly relevant for SMEs, who often face challenges in meeting tax obligations. This study, therefore, evaluates the effect of systems automation on turnover tax compliance among Small and Medium Enterprises (SMEs) in Eldoret City, Kenya. The Economic Deterrence Theory guided the study. The study adopted a cross-sectional explanatory survey. The target population comprised all 24,416 owners of registered SMEs in Eldoret City, with a sample size of 394 calculated using Yamane’s formula. The study employed a stratified random sampling technique to select respondents from SMEs in Eldoret City. The study used questionnaires as a data collection tool. Pre-testing of research instruments was achieved through a pilot study in Nakuru County. questionnaire. To assess the questionnaire's validity, the researcher evaluated content validity through expert reviews. To ensure reliability, the study used a Cronbach’s alpha above 0.7 to assess internal consistency. The study used SPSS version 25 for data analysis. The collected data were analyzed using both descriptive and inferential statistics. The findings indicated that systems automation and turnover tax compliance among SMEs in Eldoret City, Kenya, were positively and moderately correlated (r = 0.736**, p < 0.01). The β coefficient for linear regression indicates that system automation (β1 = 0.450, p < 0.05), implying that a unit increase in system automation is associated with a 0.450-unit increase in turnover tax compliance among SMEs in Eldoret City. The study concludes that automated systems can be really effective in enhancing turnover tax compliance among SMEs in Eldoret City. The study recommended that Tax authorities should continue to invest in and improve automated tax systems further to increase the accuracy and efficiency of turnover tax filing and reduce errors.
References
Aina, A. T. (2025). An Assessment of Taxation Strategies and Policy Interventions for Nigeria’s Informal Economy. FUDMA Journal of Accounting and Finance Research [FUJAFR], 3(1), 120–136. https://doi.org/10.33003/fujafr-2025.v3i1.156.120-136
Alabi, A. W., Atanda, F. A., Akintoye, I. R., & Kajola, S. G. (2024). Tax morale and taxpayers’ compliance among SMEs in Nigeria. Journal of Management World, 2024(2), 68–78. https://doi.org/10.53935/jomw.v2024i2.278
Allen, C. (2020). Reforming the recognition of expenditure in Australian income tax law: A principled framework for the characterisation of capital outgoings and timing of deductions. The University of Western Australia. https://doi.org/10.26182/YQ98-CP67
ANAN University Kwall, Nigeria, Usman, A. Y., Halidu, S. I., ANAN University Kwall, Nigeria, Fannap, D., & ANAN University Kwall, Nigeria. (2025). Impact of Tax System Automation on Revenue Generation in Federal Inland Revenue Service (FIRS), Nigeria. International Journal of Multidisciplinary and Innovative Research, 02(05). https://doi.org/10.58806/ijmir.2025.v2i5n03
Azmi, A., Sapiei, N. S., Mustapha, M. Z., & Abdullah, M. (2016). SMEs’ tax compliance costs and IT adoption: The case of a value-added tax. International Journal of Accounting Information Systems, 23, 1–13. https://doi.org/10.1016/j.accinf.2016.06.001
Belle Isle, M. N. (2021). Cash flow of small service businesses in Australia: Is there a relationship with owner tax literacy? Griffith University. https://doi.org/10.25904/1912/4073
Carnahan, M. (2015). Taxation Challenges in Developing Countries. Asia & the Pacific Policy Studies, 2(1), 169–182. https://doi.org/10.1002/app5.70
Chiaji, I., Kapkiyai, C., & Kirui, D. (2024). Tax System Automation and Value Added Tax Compliance: The Moderating Role of Obligation Cost. South Asian Journal of Social Studies and Economics, 21(10), 1–13. https://doi.org/10.9734/sajsse/2024/v21i10886
Cooper, L. A., Holderness, D. K., Sorensen, T. L., & Wood, D. A. (2019). Robotic Process Automation in Public Accounting. Accounting Horizons, 33(4), 15–35. https://doi.org/10.2308/acch-52466
Daniel, T., & Faustin, G. (2019). Effect of tax incentives on the growth of small and medium-sized enterprises (SMEs) in Rwanda: A case study of SMEs in Nyarugenge district. Journal of Accounting and Taxation, 11(5), 89–98. https://doi.org/10.5897/JAT2019.0339
Drigas, A., & Koukianakis, L. (2009). Government Online: An E-Government Platform to Improve Public Administration Operations and Services Delivery to the Citizen. In M. D. Lytras, E. Damiani, J. M. Carroll, R. D. Tennyson, D. Avison, A. Naeve, A. Dale, P. Lefrere, F. Tan, J. Sipior, & G. Vossen (Eds.), Visioning and Engineering the Knowledge Society. A Web Science Perspective (Vol. 5736, pp. 523–532). Springer Berlin Heidelberg. https://doi.org/10.1007/978-3-642-04754-1_53
Fadipe, Adeniyi Olubunmi, Adegbie Folajimi Festus, & Ogundajo Grace. (2025). TAX POLICY AND SUSTAINABLE DEVELOPMENT IN NIGERIA. International Journal of African Innovation and Multidisciplinary Research. https://doi.org/10.70382/mejaimr.v8i2.040
Francis Kipilimba, T. (2018). Impact of Tax Administration Towards Government Revenue in Tanzania- Case of Dar-es Salaam Region. Social Sciences, 7(1), 13. https://doi.org/10.11648/j.ss.20180701.13
Gwokyalya, W., & Okumu, I. M. (2023). Gross turnover assessment and tax compliance in Uganda’s small businesses: A deep inquiry into the certainty of presumptive tax law. International Journal of Law and Management, 65(5), 405–424. https://doi.org/10.1108/IJLMA-10-2022-0221
Herawati, H., Tabroni, R., & Lusiana, S. (2018). The Effectiveness of The Tax Regulation Socialization Strategies on Taxpayers’ Comprehension And Compliance In Implementing Their Tax Obligations. The International Journal of Business Review (The Jobs Review), 1(2), 145–154. https://doi.org/10.17509/tjr.v1i2.12980
Ige, V. O., Akinbogun, S. P., & Jones, C. A. (2024). Achieving the Sustainable Development Goal Against Poverty in Developing Nations: Perspective from Urban Land Titling Potentials. Springer International Publishing. https://doi.org/10.1007/978-3-031-59587-5
Ikhsan, Dr. M. F., Aziz, N. A., & Mahyudin, E. (2022). Case Study on the Implementation of Goods and Services Tax (Gst) in Malaysia and Singapore. Journal of International Studies, 18. https://doi.org/10.32890/jis2022.18.6
Karaganda Buketov University, Nurbekova, G. T., Juchnevicius, E. Е., University of Gdansk, Tussupova, L. K., & Astana International University. (2024). An integrated approach to the concept and elements of tax administration: Theoretical and legal aspects. Bulletin of the Karaganda University. “Law Series,” 114(2), 16–24. https://doi.org/10.31489/2024l2/16-24
Kessler, C. (2020). Taxpayer Non-Compliance with Input Tax Credit Rules: Data and Policy Options for Canada. Canadian Tax Journal/Revue Fiscale Canadienne, 68(3), 751–800. https://doi.org/10.32721/ctj.2020.68.3.kessler
Kessy, K. (2019). Electronic Payment and Revenue Collection in Local Government Authorities in Tanzania: Evidence from Kinondoni Municipality. Tanzanian Economic Review, 9(2), 89–106. https://doi.org/10.56279/ter.v9i2.47
Kumi, R., & Kwasi Bannor, R. (2023). Job performance, knowledge and perceived power of tax officers on tax morale amongst agrochemical traders in Ghana. Arab Gulf Journal of Scientific Research, 41(3), 260–282. https://doi.org/10.1108/AGJSR-09-2022-0163
Kummari, D. N. (2025). Advanced Practices in Auditing, Regulatory Compliance, and Smart Manufacturing Systems. Deep Science Publishing. https://doi.org/10.70593/978-93-7185-253-1
Luty, P. (Ed.). (2021). Fraud in Accounting and Taxation and Its Detection. The Practice of Central and Eastern European Countries (1st ed.). Wroclaw University of Economics and Business. https://doi.org/10.15611/2022.944.3
Moore, M. (2023). Tax obsessions: Taxpayer registration and the “informal sector” in SUB‐SAHARAN Africa. Development Policy Review, 41(1), e12649. https://doi.org/10.1111/dpr.12649
Moore, M., & Prichard, W. (2020). How Can Governments of Low-Income Countries Collect More Tax Revenue? In K. Hujo (Ed.), The Politics of Domestic Resource Mobilization for Social Development (pp. 109–138). Springer International Publishing. https://doi.org/10.1007/978-3-030-37595-9_4
Musimenta, D. (2020). Knowledge requirements, tax complexity, compliance costs and tax compliance in Uganda. Cogent Business & Management, 7(1), 1812220. https://doi.org/10.1080/23311975.2020.1812220
Ndlovu, M. O. (2025). Evaluation of tax preferences for SMEs: A case of small businesses in Gauteng, South Africa. South African Journal of Economic and Management Sciences, 28(1). https://doi.org/10.4102/sajems.v28i1.6064
Ndlovu, M. O., & Schutte, D. P. (2024). An evaluation of tax compliance among small businesses. South African Journal of Accounting Research, 1–19. https://doi.org/10.1080/10291954.2024.2372132
Ndubula, E., & Matiku, E. (2021). The Effects of Tax Education on Government Revenue Collection: The Case of Small and Medium Enterprises in Morogoro Municipality, Tanzania. Journal of Economics, Management and Trade, 28–41. https://doi.org/10.9734/jemt/2021/v27i730354
Njuguna, T. J., & Warui, F. (2025). Itax System Role in Tax Compliance for Residential Landlords in Kiambu County, Kenya. Asian Journal of Economics, Finance and Management, 7(1), 152–168. https://doi.org/10.56557/ajefm/2025/v7i1261
Oguttu, A. W. (2020). Challenges of Applying the Comparability Analysis in Curtailing Transfer Pricing: Evaluating the Suitability of Some Alternative Approaches in Africa. Intertax, 48(Issue 1), 74–102. https://doi.org/10.54648/TAXI2020006
Oritsematosan Faith Dudu, Olakunle Babatunde Alao, & Enoch O. Alonge. (2024). Conceptual framework for AI-driven tax compliance in fintech ecosystems. International Journal of Frontiers in Engineering and Technology Research, 7(2), 001–010. https://doi.org/10.53294/ijfetr.2024.7.2.0045
Peprah, J. A., Andoh, F. K., Avorkpo, E. A., Dafor, K. N., Afful, B., & Obeng, C. K. (2022). Compliance Burden and Tax Gap Among Micro and Small Businesses: Evidence From Ghana. Sage Open, 12(4), 21582440221126985. https://doi.org/10.1177/21582440221126985
Petit, G., Tedds, L. M., Green, D., & Kesselman, J. R. (2021). Policy Forum: Re-Envisaging the Canada Revenue Agency—From Tax Collector to Benefit Delivery Agent. Canadian Tax Journal/Revue Fiscale Canadienne, 69(1), 99–114. https://doi.org/10.32721/ctj.2021.69.1.pf.petit
Reyes-Tagle, G., Dimitropoulou, C., & Rodríguez Peña, C. C. (2023). Digitalization of Tax Administration in Latin America and the Caribbean: Best-Practice Framework for Improving E-Services to Taxpayers. Inter-American Development Bank. https://doi.org/10.18235/0005260
Sarmento, J. M. (2023). Taxation in Finance and Accounting: An Introduction to Theory and Practice. Springer International Publishing. https://doi.org/10.1007/978-3-031-22097-5
Schoeman, A. H. A., Evans, C. C., & Du Preez, H. (2022). To register or not to register for value-added tax? How tax rate changes can influence the decisions of small businesses in South Africa. Meditari Accountancy Research, 30(7), 213–236. https://doi.org/10.1108/MEDAR-05-2021-1309
Sisay, B. (2024). “Factors Affecting Turnover Tax Collection of Category ‘B’ Taxpayers” In Ethiopia, South Gonder Zone. GBS Impact: Journal of Multi Disciplinary Research, 10(1), 181–190. https://doi.org/10.58419/gbs.v10i1.1012413
Swistak, A. (2016). Tax penalties in SME tax compliance. Financial Theory and Practice, 40(1), 129–147. https://doi.org/10.3326/fintp.40.1.4
Tan, C. W., & Pan, S. L. (2003). Managing e-transformation in the public sector: An e-government study of the Inland Revenue Authority of Singapore (IRAS). European Journal of Information Systems, 12(4), 269–281. https://doi.org/10.1057/palgrave.ejis.3000479
Tang, T. Y. H. (2015). Does Book-Tax Conformity Deter Opportunistic Book and Tax Reporting? An International Analysis. European Accounting Review, 24(3), 441–469. https://doi.org/10.1080/09638180.2014.932297
Tanimu, M. G. (2024). Assessing the Impact of Taxpoynt Platform on Small Business Tax Compliance through Digitization. Proceedings of the 17th International Conference on Theory and Practice of Electronic Governance, 378–380. https://doi.org/10.1145/3680127.3680143
Tarmidi, D. (2019). Tax Compliance: Impact of Employee Internal Factors, Moderated by Tax Uncertainty. International Journal of Academic Research in Business and Social Sciences, 9(5), Pages 294-304. https://doi.org/10.6007/IJARBSS/v9-i5/5859
The Influence of Tax Education on Tax Awareness Among Secondary School Students in Malaysia. (2023). Asian Journal of Research in Education and Social Sciences. https://doi.org/10.55057/ajress.2023.5.1.14
Umanhonlen, F. O., & Umanhonlen, R. I. (2020). Deterrent tax fraud in nigeria: A causal factor and conceptual review. Journal of Management and Science, 10(4), 29–39. https://doi.org/10.26524/jms.10.8
Yesegat, W. A. (2009). Value added tax in Ethiopia: A study of operating costs and compliance [UNSW Sydney]. https://doi.org/10.26190/UNSWORKS/19611
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Kiplangat Francis Kirui, Kiplangat Francis Kirui, Tobias Olweny, Josephat Cheboi
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
