EFFECT OF TAXATION ON PERFORMANCE OF MEDIUM-SIZED ENTERPRISES IN KAJIADO COUNTY, A CASE STUDY IN KITENGELA TOWN, KAJIADO EAST WARD

Authors

Keywords:

Gross Domestic Product, Tax, Medium enterprises.

Abstract

This study examined the effect of taxation on the performance of medium-sized enterprises in Kitengela Town, Kajiado County. The study sought to address the following specific objectives; to determine the effect of Value Added Tax on the performance of medium-sized enterprises in Kajiado County, to evaluate the effect of Income Tax on the performance of medium-sized enterprises in Kajido County and to assess the effect of Excise tax on the performance of medium-sized enterprises in Kajiado County. The study was anchored on three theories; Ability-To-Pay theory; Benefit Theory of Taxation and Kaleckies Theory of Taxation. The research adopted cross-sectional research design. The target population of this study comprised of 1,229 MEs. Simple random sampling was used to select the sample size of 302 from the different business/activity sectors. This study used questionnaires with fixed choice formats, as well as interviews as the main data collection instruments. A pilot study was undertaken on 30 of the respondents to test the reliability and validity of the questionnaire. Quantitative data were analyzed using SPSS version 25 where relationships between the variables were assessed using correlation and regression analysis. Quantitative data were analyzed using SPSS version 25 where relationships between the variables were assessed using correlation and regression analysis. The study found out that there was a positive and significant relationship between Value Added Tax and performance of MEs. Further, the results revealed that there was a positive and significant relationship between Income Tax and performance of MEs. Lastly, there was a positive and significant relationship between Excise Tax and performance of MEs. Based on the findings, the study concluded that Value Added Tax, Income Tax and Excise Tax have a positive and significant effect on performance of MEs. The study recommends that as a broad-based tax on final consumption, VAT regimes must determine whether, or the extent to which, the purchase should be treated as acquired for business purposes or for private consumption. To eliminate the tax burden among MEs brought about by income tax, policy makers should extend exemption to transactions necessitated by regulatory changes, compulsory government acquisitions and internal restructures considering that such transactions are rarely undertaken for a commercial gain. Excise tax should be developed in such a way that it would stimulate rather than stop the development of entrepreneurship.

Author Biography

Okoth Wesley Otieno

Dr. Otieno Wesley Okoth is a Lecturer in the Business Department at the Islamic University of Kenya and also possesses Eight years’ experience as Lecturer at The East African University (TEAU). He has extensive professional experience in Lecturing Finance, Economics, and Accounting undergraduate courses and has successfully supervised various undergraduate students in Accounting and Finance Areas.

In addition, He has 10 years of Managerial experience in Government Parastatals and Non-Govt sector and worked in various capacities which include being a Parastatal Ag. Managing Director, Commercial/Finance Manager, Accountant, Internal Audit Manager in various Parastatals. Also being a Senior Audit Manager in a registered private audit firm and having consultancies with Water Sector Trust Fund as County Resident Monitor, Migori, and Financial Consultant with an International engineering Firm- WCES.

His research interests cover a wide range of topics, including Financial Innovation, Behavioural Finance, and Financial Performance. He has also published articles and research papers in various international refereed journals.

He is a trained Geographical Information System Expert, Trained Governance expert, Trained ISO 9001:2008 & ISO 14001:2004 Auditor, Associate Member- Marketing Society of Kenya, Risk Management Professional, Advance Excel trained Officer and competent in various Accounting and ERP softwares.

Basic Research Interests

Development Economics, Behavioural Finance, Financial Inclusion, Public Finance, Financial Risk Management, and Entrepreneurial Finance.

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Published

2024-11-25