A Survey of income tax avoidance by companies in Nairobi
Income tax reduces the wealth of the taxpayers. To ensure that this wealth loss is minimized, rational individuals engage in tax avoidance activities. They may do this inspite of anti-avoidance legislation. This survey attempts to find out whether companies in Nairobi are involved in income tax avoidance activities. For this purpose, a questionnaire has been administered on a random sample of companies. By way of introduction, tax avoidance and the related concept of tax evasion are defined. This is follo~ed by a review of the courts' approach to tax avoidance. After this, tax avoidance opportunities in Kenya are explored and a case for tax avoidance developed. The survey findings confirm that companies in Nairobi engage in income tax avoidance. The findings also show that strategies used in income tax avoidance vary between categories of companies and in emphasis between tax compliance and non-compliance considerations. They further suggest that income tax avoidance activity increases with the age and size of the company.