Factors affecting voluntary tax compliance on rental income: a case study of Nairobi landlords.

A Project Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirements for the Degree of Masters of Business Administration (MBA)The purpose of the study was to examine the factors affecting voluntarily tax compliance in Kenya. The study was guided by the following research questions: What are the attitudes of the Kenya landlords towards taxation? What are various factors that influence Kenyan landlord taxpayers towards taxation? And, which of the established factors have the most influence on the attitude of the Kenyan landlord tax payers? The study adopted a descriptive research design, i.e. the design involved observation and description of the behavior of a subject with no influence on the outcome. The target population in the study was the Landlords in Nairobi whose tax compliance were under review by Kenya Revenue Authority. A non-probabilistic sampling technique was employed to select forty five (45) respondents as it was necessary for the nature of the subject. A non-probabilistic sampling technique guaranteed the researcher that everyone in the targeted population stood a fair chance of being sampled. The study used questionnaire for gathering and collecting data. Presentation of data was done in the form of figures and tables for easy interpretation. To guarantee actual and competent data analysis process, the data was coded, organized and studied using descriptive and inferential analysis. The Statistical Package for Social Sciences (SPSS) was used for analysis. The findings on the attitudes of the Kenya landlords towards taxation, attitude and perception that politicians misuse taxes, peers and financial and family obligation had strong positive responses. The study finding of the study on the social norms and respondent’s income level strongly influence the level of tax non-compliance among the Kenyan taxpayers on rental income. Finally on the measures to be done to encourage voluntary tax compliance, the study found out that tax reforms ought to be carried out to encourage tax compliance. In regards to factors influencing Kenyan landlord taxpayer’s attitude towards taxation, The study concluded that attitude factors, high tax rate, unfair tax system, social norms, gender and education level factors are significant and play a great role towards the compliance or non-compliance of Kenyan taxpayers on rental income. In encouraging tax compliance among Kenyan landlords, the study concluded that tax reduction, tax reforms and simplifying tax payment procedure be carried out. The study recommended that the government should sensitize the tax payers on the importance of paying taxes. It is also recommended that the government ought to be transparent on how the revenue collected from taxation is being utilized and KRA need to carry out tax reforms by factoring in the views of all the taxpayers. The researcher recommends that further study be carried on the other factors that might influence the voluntary tax compliance on rental income. Again further study also need to be done on the same topic but covering a different location other than Nairobi