Effects of Electronic Tax Filing Systems on Compliance Amongst Small and Medium Enterprises Within Mombasa Central Business District

Abstract

This study investigates empirically the influence of online tax filing and payment system supported by taxpayer education programs on individual taxpayers‟ compliance in Kenya to disclose factors responsible for noncompliance among Small and Medium enterprises category. For the researcher to fully understand the depth of the phenomenon, the approach of the study besides the usual tax compliance model also expounds the perceived benefits of electronic filing system and taxpayer education programs with attention to their relationship. The statistical regression analysis was applied to the questionnaire-generated primary data. The analysis was applied to test the effect of online tax filing systems on taxpayer compliance behaviour among the small and medium taxpayer category in Kenya. Taxpayers‟ knowledge about computation of tax due on their income earned from different sources and mastery of filing procedures was used to measure Tax Education level. The results revealed that taxpayers‟ knowledge on electronic filing and payment system gained through relevant training programs by KRA is significantly related to the tax compliance patterns. The study concludes with several recommendations for enhanced tax training exercise extending to diverse groups including managerial level with a view to enhance their understanding in taxation systems in place. Further, specific policies should be formulated to address taxpayer education to engrain the taxpayers‟ duty and obligation under various tax regimes in Kenya.