Greener Journal of Economics and Accountancy

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Korir et al

Greener Journal of  Economics and Accountancy Vol. 4 (1), pp. 009-020, January 2015

 ISSN: 2354-2357 © 2015 Greener Journals

Research Paper

Manuscript Number: 012914079



Determinants of Tax Compliance among Small Taxpayers in Western Kenya


1Japhet Korir, 2Philip Adoyo, 3Naibei Isaac, *4Fredrick Onyango Aila, 5Robert Kisavi Mule, 6Asewe Stephen Ogut,

7Dancan Mayieka Onchonga, 8Alecia Elizabeth Ochido Okungu,

9Mr. Justine Oyagi Omoke, 10Dr. Gideon Momanyi


1,2,3,5,6,7,8Department of Accounting and Finance, School of Business and Economics, Maseno University, Private Bag, Maseno, Kenya.

4,9Department of Marketing and Management, School of Business and Economics, Maseno University, Private Bag, Maseno, Kenya.

10Department of Economics, School of Business and Economics, Maseno University, Private Bag, Maseno, Kenya.

Emails: 1korirjaphet@, 5kisavimule2003@ yahoo, 6asewestephen10@,

7duncan.onchonga@, 8aleciaokungu3@, 9omokej2001@,



*Corresponding Author’s Email: fredrick.aila@


In Kenya, tax revenues make up to 80% of the government’s budgetary resources with a negligible proportion coming from grants and loans owing to the stringent conditionalities adopted as part of Structural Adjustment programmes (SAPs) imposed on the Kenyan government in the 1990s by International monetary Fund (IMF) and the World Bank. Different taxation methods are used to create a tax base which forms a pool that the tax authority can tap thereby placing a tax burden on the populace. Kenyan tax system is, however, often characterized by increasing number of non compliance among the small taxpayers and as a result of this the government has started to focus reforms specifically tailored to the SMEs so as to improve the level of compliance in Kenya. The broad objective of the study was to investigate the determinants of tax compliance in Kakamega and Kisumu, Western Kenya. Specifically determine the effect of equity on tax compliance; establish the influence of fairness of tax regime on compliance level; establish the influence of cost of complying on compliance level and determine the effect of cost of compliance on the tax compliance level of small tax payers in Western Kenya. In order to achieve the objectives of the study descriptive design was adopted. The target population for this study was sampled from those registered with KRA as VAT a payer that is 5,000 taxpayers. Using simple random sampling a sample of 370 was obtained. The study used questionnaires to collect data. Descriptive statistics and multiple regression analysis were used to analyze data. The result indicate that only tax burden (B=.608, p=.040) and equity (B=-1.055, p=.005) were significant predictors of level of tax compliance among SMEs in Western Kenya. The other predictors: complexity (B=-.180, p=.098), Fairness (B=-.032, p=.780), cost of complying (B=.435, p=.138), and policy actions (B=.017, p=.927) were not significant predictors of level of tax compliance. The study recommended reduction of equity and increase of tax burden. Further study was required to assess the effectiveness of complexity, fairness, cost of complying, and policy actions in determining level of tax compliance.

Key Words: Tax Modernization Programme, Turnover Tax, Value Added Tax, Tax Compliance, Equity, Compliance Cost. 


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