THE DETERMINANTS OF TAX COMPLIANCE IN KENYA

The increased need for social services and infrastructure by the citizenry has put a lot of pressure in Governments to raise additional taxes finance public expenditure. This expenditure is best financed through tax rather than debt. As at 30 th September 2017, Kenya’s gross debt level stood Ksh 4,486.8 billion. 51% estimated domestic product Ksh. 8,805 billion 2017. already above World Bank International Monetary Fund set Debt Burden Thresholds 40 – 50%. Sweden’s tax-to-GDP ratio 35% compares unfavorably Kenya situation where year 2016/2017, 19%. collection continued fall behind target. By end June total cumulative revenue collected amounted 1,400.6 against revised target 1,455.4 representing shortfall 54.8 To address challenges posed increasing servicing debt, there increase compliance. study therefore evaluated determinants compliance Kenya. research aimed illuminating light onto influence if was resultant benefit taxpayers voluntary Revenue Authority would also gauge it achieving objectives its taxpayers. based on Ricardian Theory Taxation, Ability Pay Taxation Game Model Equilibrium Tax Compliance. desk intended evaluate From various studies, established that small reductions marginal rate can have general positive impact but this only up point decrease sufficiently offset base thereby net collections. It emerged low cost were associated with high level. Similarly, enforcement instruments, including audit rates punishment function are compliance, recommended an introducing currently untaxed sources, variation rates, reduction complexity returns procedures, audits, application interest, penalties, fines jail terms noncompliant making same public. Key Words: Compliance, CITATION: Sululu, A. W. (2021). Strategic Journal Business & Change Management, 8 (2), 105 114.