Small and Medium Sized Enterprises in Nairobi East Tax District

Abstract

In this study the researcher sought to explore the different factors that determine tax payers’ compliance in Nairobi East Tax District. Using a linear regression probit model the researcher found some similarities and differences in factors that are correlated to tax compliance in the locality under study. An increase in the tax payers understanding of the tax laws and the tax system as well as an increase in government accountability with regards to provision of public good and services results into higher compliance levels, thus more of funds through revenue collection. The results of this research will help the government in making policies as they will gain insight on the extent of tax payers knowledge and the ways its affecting tax compliance. It will also help the revenue authorities on administration especially with designing tax payers’ education programmes, simplicity of the taxation system and developing a better understanding of the tax compliance behaviour. It will also contribute to the current literature on the factors that define tax payers’ compliance and discuss the strategies of increasing compliance.