Abstract: the main objective of this study was to assess the effect of tax reforms on compliance among small and medium enterprises operating in Bomet County. The specific objectives were to establish the effect of online filing on compliance among small and medium enterprise in Bomet Town, to establish the effect of taxpayer education on compliance among small and medium enterprise in Bomet Town, to determine the effect of stringent tax penalties on compliance among small and medium enterprise in Bomet Town and to assess the effect of using simple tax regimes on compliance among small and medium enterprise in Bomet Town. The study adopted a descriptive design. The total population targeted 350 SMEs registered by the county government of Bomet revenue department. The study used cluster sampling and simple random sampling technique. The sample size of 183 of total population was selected. The study used questionnaire to collect primary data from the SMEs in Bomet town. Questionnaires responses were analyzed using the SPSS software. The results of the study were presented using graphs and tables. The study concluded that, simple tax regime had the greatest effect, online tax filing came second, and tax payers’ education and training was third while stringent tax penalties had the least effect on the SMEs turn over tax compliance. Therefore the study recommends that the KRA team should work closely with the SMEs to avoid cases of default due to down time of the net or failure of the systems. Further KRA should remove the many logging procedures for the customers except the password to make the process simple. Further KRA should continue with their education and training programmes so as to ensure that they keep abreast with the changing business environment. Also KRA should reduce on the amount of tax on their various products which in most cases was too high for the SMEs to meet. Further the process of knowing how much tax one is supposed to pay should be customized for the SMEs to always calculate for themselves the amounts beforehand. Finally the period for imposing the penalties should not come immediately one fails to make their returns but some warnings should be given like two weeks before the penalties are imposed. Further KRA should come up with short coded messaging systems to act as reminders when the tax returns due date is approaching so as to prevent many penalties which occurs because one may forget.
Keywords: KRA, Tax Reforms, Small and Medium Enterprises.
Title: Effect of Tax Reforms on Compliance among Small and Medium Enterprises in Kenya: A Case Study in Bomet Town
Author: STEPHEN KIRUI, DANIEL KAMAU, DR KEPHA OMBUI
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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