Effect of Tax Law Complexity on Domestic Tax Compliance Among Medium Taxpayers in the West of Nairobi Tax District, Kenya
DOI:
https://doi.org/10.70619/vol6iss8pp53-64-929Keywords:
Tax Law Complexity, Domestic Tax Compliance, Medium TaxpayersAbstract
Tax revenue is the backbone of all governments’ revenue worldwide. Taxation is the principal source of government revenue used to finance public expenditure. In Kenya, the expansion of sectors has widened the tax base, yet domestic tax compliance among medium taxpayers remains a persistent challenge. Institutional factors play a critical role in influencing tax compliance behaviour. This study sought to determine the effects of Tax law complexity on domestic tax compliance among medium taxpayers in the West of Nairobi Tax District, Kenya. The study was guided by the following theories. Ability to Pay Theory and Distributive Justice Theory. The research adopted an explanatory research design. The target population comprised 2302 medium taxpayers, with a sample size of 340 respondents. The study response rate of 81.8% showed that, out of the targeted 340 respondents, 278 completed and submitted their questionnaires. Questionnaires were used to collect primary data from business owners. The data were analyzed using descriptive and inferential statistical techniques. The study's regression analysis found that tax law complexity had a significant negative effect on domestic tax compliance (β = -0.078, p = 0.031). The study recommends that policymakers should prioritize the simplification and codification of tax legislation. This involves reviewing and consolidating tax acts to reduce ambiguities, using plain language in drafting new regulations, and providing clear, accessible guidelines tailored to medium taxpayers. Further studies should investigate the role of digitalization, specifically examining the impact of mobile tax filing applications, automated tax calculators, and the perceived ease of use of e-tax systems on domestic tax compliance.
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