Moderating Effect of Tax Amnesty on the Influence of Tax Systems Digitization, Taxpayer Education, and Perceived Fairness on Turnover Tax Compliance Among Micro and Small Enterprises in Machakos Town, Kenya
DOI:
https://doi.org/10.70619/vol6iss7pp43-56-909Keywords:
Tax Amnesty, Digitization of Tax Systems, Taxpayer Education, Perceived Fairness, Turnover Tax Compliance, Digital Tax Reforms.Abstract
Governments across the globe are increasingly relying on tax amnesties and simplified regimes to enhance compliance and expand revenue mobilisation within the micro and small enterprise (MSE) sector. This study examined the moderating effect of tax amnesty on the relationship between digitisation of tax systems, taxpayer education, perceived fairness of tax laws, and turnover tax compliance among MSEs in Machakos Town, Kenya. It assessed the direct effects of these three factors on compliance and evaluated whether tax amnesty strengthens these relationships. Anchored in Social Influence Theory, Technological Determinism Theory, and Supply-Side Tax Theory, the study adopted an explanatory research design. From a target population of 26,481 registered MSEs, a stratified random sample of 386 enterprises was selected. Primary data were collected using structured questionnaires and analysed through descriptive statistics and hierarchical multiple regression in STATA version 14. The baseline model showed that digitisation (β = 0.264, p < 0.001), taxpayer education (β = 0.324, p < 0.001), and perceived fairness (β = 0.299, p < 0.001) all positively and significantly affected compliance, jointly explaining 66.8% of the variance (R² = 0.668). Tax amnesty had a positive direct effect (β ≈ 0.18, p < 0.001), and its interactions with digitisation (β ≈ 0.13, p < 0.001), taxpayer education (β ≈ 0.12, p < 0.001), and perceived fairness (β ≈ 0.11, p < 0.001) were all significant, confirming its moderating role. MSE age and size also showed positive, significant effects. The study concludes that digitisation, taxpayer education, and perceived fairness significantly enhance turnover tax compliance, particularly when reinforced by strategically implemented amnesty programmes. It recommends that the Kenya Revenue Authority intensify digital tax reforms, strengthen taxpayer education, promote fairness and transparency, and apply amnesty programmes selectively to sustain long-term compliance and tax base expansion.
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