Journal of Finance and Accounting

Effect of Dispute Resolution Mechanism Reforms on Rental Income Tax Compliance Among Property Owners in Ngong Town, Kenya

Lilian Nyokabi Ndegwa, Prof. Lucy Rono, Dr. Robert Odunga — Wed, 08 Jan 2025 00:00:00 +0000

Purpose: Despite these reforms tax compliance for the rental income tax has remained low since its introduction. This study aimed to determine the effect of dispute resolution mechanism reforms on rental income tax compliance among property owners in Ngong Town, Kenya. The study was guided by the following theories: Ability to pay Theory and Conflict Resolution Theory.

Methods: The study adopted an explanatory design and the target population was 2,468 rental income tax compliance among property owners in Ngong Town, Kenya and sample size of 344 respondents. Out of a total of 344 issued questionnaires, 251 individuals correctly filled their questionnaires and submitted them resulting in a response rate of 73%. Primary data collection was collected using structured questionnaires. The data was analyzed using descriptive, inferential statistics and multiple linear regression analysis.

Results: The study regression analysis found that dispute resolution mechanisms reforms had a positive and significant effect on rental income tax compliance β = 0.568, p = 0.000,

Conclusion: It is recommended that the government ought to prioritize enhancing dispute resolution mechanisms. The significant positive effect of these mechanisms on rental income tax compliance suggests that improving them can lead to better tax compliance rates. Future research could explore the effects of socioeconomic factors on rental income tax compliance.

Effect of Tax Literacy on Digital Income Tax Compliance among E-Commerce Traders in Nairobi, Kenya

Bonventure Alusiola Lusala, Dr. Bruce Ogaga, Dr. John K. Tarus — Wed, 08 Jan 2025 00:00:00 +0000

Purpose: The global digital economy has created a disruptive market where goods and services are exchanged online without requiring a physical presence at the point of sale. This poses a challenge for many governments worldwide in terms of collecting appropriate tax revenues from these digital platforms. The purpose of this study was to determine the effect of tax literacy on digital income tax compliance among e-commerce traders in Nairobi, Kenya. The theory that guided this study was the unified theory of acceptance and use of technology.

Methods: Explanatory research design was used in this study. The target population was 130 e-commerce traders in Nairobi, Kenya and a census survey was applied. The survey had 110 responses, which thereby 84.6% response rate. Questionnaires were used to collect primary data and analysis included both descriptive and inferential statistics. Null hypothesis was tested at 95% confidence level, and consequently, a significance level of 0.05 using the multiple regression analysis.

Results: The findings reveal that tax literacy has a positive and significant effect on digital income tax compliance among e-commerce traders in Nairobi, Kenya (β=0.206, p-value=0.004).

Conclusion: The Kenya Revenue Authority (KRA) should implement comprehensive education programs to increase tax literacy among e-commerce traders. These programs could focus on simplifying complex tax laws, providing practical guidance on compliance, and leveraging digital platforms for easy access to information. Future studies may examine the impact of psychological factors, such as taxpayer morale, on digital income tax compliance.

Government Taxation and Growth of Large Manufacturing Firms in Nairobi City County, Kenya Registered with Kenya Association of Manufacturers

Eunice Kagwiria Kalwigi, Dr Fredrick Warui, Dr Farida Abdul — Fri, 17 Jan 2025 00:00:00 +0000

Purpose: This article explores the intricate relationship between government taxation and the growth of large manufacturing firms. Specific objectives of this study were to investigate effect of corporate income taxes, excise duty taxes and custom duty taxes on growth of large manufacturing firms. Finally, to examine moderating effect of firm size on the relationship between government taxations and growth of large manufacturing firms.

Methods: The research was guided descriptive research design with secondary data obtained from audited financial statements. The researcher employed stratified and systematic sampling to select 73 organizations from Nairobi City County's large manufacturing firms for the study. Panel data analysis was employed.

Results: The findings indicated that corporate income taxes had a negative and significant effect on growth of manufacturing firms (β=-0.002, p=0.045); excise duty taxes had a positive and significant effect on growth of manufacturing firms (β=0.004, p=0.000); and custom duty taxes had a positive and significant effect on growth of manufacturing firms (β=0.005, p=0.005). Further, the interaction between government taxations and firm size had a negative and significant effect on growth of large manufacturing firms in Kenya (β=-0.0028, p=0.000).

Conclusion: The study found that corporate taxes positively impact growth, as higher taxes correspond with increased income and tax contributions from rapidly growing firms. The relationship between excise duty and growth was positive but not statistically significant, suggesting little effect on large manufacturing firms. The study recommends maintaining current corporate tax rates for large manufacturers, as they do not impede growth. Policymakers should consider the minimal effects of these taxes when designing fiscal policies, and future research could investigate other tax-related factors. Additionally, firms are encouraged to expand their asset bases to enhance investment potential, improve funding security, and achieve economies of scale.