DETERMINANTS OF VOLUNTARY RENTAL INCOME TAX COMPLIANCE BY LANDLORDS IN KIAMBU TOWN, KIAMBU COUNTY, KENYA

Abstract

Tax non-compliance stands a bigger problem and is prevalent in many economic sectors including housing and property developers. Despite the tremendous growth from real estate sector in Kenya, the corresponding tax collection from the sector has remained very low. In 2017 rental income tax compliance rate was low at 40% in Kiambu Town. The purpose of this study was to establish the determinants of voluntary rental income tax compliance by landlords in Kiambu Town, Kenya by employing descriptive survey design. The target population was 789 rental property owners in Kiambu Town. A structured questionnaire was employed to collect primary data and analyzed using SPSS Version 25.0. Regression of coefficients indicated that tax knowledge, attitude, and perception have positive and significant effect on voluntary rental income tax compliance while the cost of compliance and tax rate levied on rental property have negative and significant effect on voluntary rental income tax compliance. The study concludes that attitude and perception has the highest positive impact on voluntary rental income tax compliance followed by tax knowledge. The cost of compliance has the greatest negative impact on voluntary rental income tax compliance followed by tax rate levied on rental property. There is need for periodic workshop training, tax educational programmes organized by the Kiambu county governments and Kenya Revenue Authority to sensitize and about the importance of tax compliance. There is also need for Kiambu county government and KRA to review the costs incurred by taxpayers during their attempt to comply with taxation requirements with aim of simplifying the process. Further, there is need for Kenya Revenue Authority to review the tax rates levied on rental property to ensure that the rates are favorable and do not burden the property owners.

Keywords: rental income, tax compliance, landlords, Kiambu Town, Kenya