An assessment of the effect of tax obligations Awareness on compliance behaviour among Partnership registered businesses in Machakos County, Kenya

Abstract

ABSTRACT Kenya Revenue Authority is expected to meet its annual revenue targets to enable the Government meet its recurrent and development expenditure with minimal borrowing. In doing so, the Authority has substantially invested in modernization and taxpayer education services among other key revenue initiatives. However, except for the financial years 2006/07 and 2007108 when the Authority exceeded the revenue targets by 1.2% and 2.2% respectively, the Authority has failed to meet its annual revenue targets for the period between 2008/09 to 2012/13. This is partially attributed to noncompliance with registration, ling, payment and keeping proper books of accounts that facilitate audit checks with high revenue yield. This is due to lack of reliable, verifiable and up to date information on awareness of tax obligations among taxpayers and its effect on tax compliance behaviour. The overall objective of the proposed study was therefore to assess the effect of tax obligations awareness on compliance behaviour among registered partnership businesses. The study adopted a descriptive research design and the target population was a representative sample of partner-ship businesses registered in Machakos town. A representative sample of the aforementioned population was selected using Stratified random sampling method. Data was collected using a semi-structured questionnaire which was administered face to face to the respondents. Collected data was checked for errors of omission and commission. Data was then classified, measured, analysed and interpreted, with respect to the study objectives. Analysis was done using descriptive statistics including the assessment of central tendency (convergence), and of dispersion (divergence). Test of independence (t-test) and ANOVA tests were carried out to test difference of means whilst Pearsons Correlation was employed to test the relation-ship between awareness of tax requirements (Income tax, VAT and TOT) and compliance behaviour. The results of the study will be vital in providing information to the revenue agency and also inform relevant tax policies.