Influence of Complexity of Tax Returns on Tax Compliance in the Informal Sector in Kenya : Survey of Nyeri Town

DOI: 10.21276/sb.2017.3.10.14 Abstract: Tax non-compliance reduces tax collection and the tax performance within a country. The Kenyan government has implemented various strategies to bring businesses in the informal sector into the tax bracket. However, available data shows that tax collections from the informal sector are above average but on a declining trend. The purpose of this study was to identify the influence of complexity of tax returns on tax compliance in the informal sector in Nyeri Town. The study adopted a crosssectional survey design and targeted 715 informal businesses in Nyeri Town. Stratified random sampling technique was used to select 143 informal businesses to participate. Researcher-administered questionnaires were used to collect data from the respondents. Descriptive methods such as frequency distribution, percentages, mean, were used to summarize and organize data. Chi-square tests and correlation analysis were employed to establish relationships between study variables. Findings were presented using tables of frequencies and percentages, Majority (71%) of the participants indicated that they could not calculate their tax returns on their own. The study found that complexity of tax returns had a significant relationship (p=0.001) with tax compliance at 95% confidence level. The researcher therefore concludes that there is a significant relationship between complexity of tax returns and tax compliance It was recommended that the government should commit monies to eservice delivery to enhance tax compliance.