EFFECT OF CUSTOMER SERVICE ON TAX COMPLIANCE IN KENYA, THE CASE OF SME’s IN NAIROBI CENTRAL BUSINESS DISTRICT
EFFECT OF CUSTOMER SERVICE ON TAX COMPLIANCE IN KENYA, THE CASE OF SME’s IN NAIROBI CENTRAL BUSINESS DISTRICT
Mwangi Salverius Gatheru - A PhD Student of Kenyatta University, Kenya
ABSTRACT
The Kenya Revenue Authority is involved in revenue collection mainly from taxation of taxable persons in the economy. Small businesses are often involved in tax evasion practices deliberately or without knowledge. It is not an easy fete to convince the small and medium enterprises to comply with tax laws. It is for this reason that customer service is seen as a good strategy through which tax compliance among the Small and Medium Enterprises. This study had the general objective of assessing the effect of customer service on tax compliance in Kenya. The study had three specific objectives: To find out the effect of tax payer training on tax compliance, complexity of the tax system and to examine how communication to customer strategy on tax compliance, a case of SMEs in Nairobi City County. The study adopted a descriptive research design because it had the objective of establishing the relationship between the variables. The study had a target population of 1,500 Small and Medium Enterprises operating with the Nairobi Central District. A sample of 150 was selected through stratified sampling which acted as a representative of the entire population. The study used descriptive statistics and inferential statistics in data analysis. The study has found out that the taxpayer training had a statistically significant influence on levels of tax compliance among the SMEs. Further, the study has found there is a need to improve the customer service of KRA in order to foster voluntary tax compliance. The regression model has found out that 31 % of the variations in tax compliance among the SMEs is explained by taxpayer training, complexity of the tax system and communication strategy. The study recommends that the KRA needs to establish a strategic customer service department in order to facilitate information dissemination which will foster tax compliance among the SMEs in Kenya. Tax training should be done regularly and the appropriate communication channels should be used.
