The Effect Of Tax Reforms On Corporate Tax Compliance To Kenya Revenue Authority

Abstract

Taxation plays a significant role in financing public expenditure of a country. In every jurisdiction, the responsibility of collection of taxes lies with the revenue authorities and it‟s therefore relevant to determine their role in a country‟s tax system. The payment of tax is not as a result of an automatic behaviour but as a result of policies that rely on deterrence. Tax has undergone various reforms since 1986 and the challenges of fiscal budget deficits posed by KRA now are not any different from previous years. Noncompliance among firms creates poses a great challenge towards realization of revenue collection target by the revenue authorities. Recent studies on tax compliance, have been based on social and psychological theories relating to attitude and tax payer behaviour however little is known about the effect of the reforms to corporate tax payer compliance in an economic perspective highlighting a Kenyan case. The objective of this study was to analyse effect of policy, administrative and technological tax reform on corporate tax compliance. A census was done on domestic taxes department staff at KRA headquarters. Self-administered questionnaires yielded a 64% response rate. The data was subjected to descriptive and inferential analysis. Reliability and internal consistency of the measurement scale was tested using Cronbach‟s alpha. Analysis of Variance (ANOVA) test revealed a p value of 0.00 hence the model was a good fit. Findings revealed that tax reforms has an inverse effect to corporate tax compliance. Results confirm that the tax reforms have not have achieved the intended purpose.