The effect of perceived usefulness of e-filling system on tax compliance among SMEs in Kakamega County, Kenya

Daniel Sitawa Ouma; Ben Oseno; Dennis Bulla

doi:10.51867/AQSSR.2.4.45

Authors

Daniel Sitawa Ouma Masinde Muliro University of Science and Technology, Kenya Author https://orcid.org/0009-0007-8072-594X
Ben Oseno Masinde Muliro University of Science and Technology, Kenya Author https://orcid.org/0009-0002-0788-6783
Dennis Bulla Masinde Muliro University of Science and Technology, Kenya Author https://orcid.org/0000-0003-2530-8012

DOI:

https://doi.org/10.51867/AQSSR.2.4.45

Keywords:

E-Filling System, Perceived Usefulness, SMEs, Tax Compliance

Abstract

Around the world, many tax agencies that are adopting electronic tax administration systems continue to face significant challenges due to taxpayer opposition, underutilization, and reluctance to use electronic filing systems. This study aimed to investigate the impact of perceived usefulness and perceived ease of use of E-filing on tax compliance among Small and Medium Enterprises [SMEs] in the county. The Technology of Acceptance Model [TAM] guided this research. The study adopted a descriptive research design, and the target population was 2,272 small and medium enterprises within Kakamega County. The sample size of 340 was determined. Data was collected through structured questionnaires comprising both open-ended and close-ended questions. The validity and reliability of instruments were established through conducting a pilot study. The questionnaires gave Cronbach alpha coefficients of α above 0.7, an indication of a high level of reliability. The collected data was then coded and analyzed using the SPSS version 28 computer program. Data was analyzed using descriptive statistics such as frequencies, percentages, means, and standard deviations and inferential statistics such as correlation analysis, multiple regression analysis, analysis of variance, and hypothesis testing. From the results, the corrected R-square value of 0.329 implied that the model explains 32.9% of tax compliance through predictor factors such as perceived usefulness, perceived ease of use, perceived risks, and training and educational programs. The hypothesis testing results showed that perceived usefulness of the E-filing system significantly affects tax compliance. From the study findings, we concluded that the perceived usefulness of the e-filing system was found to have a significant positive effect on tax compliance, which suggests that when taxpayers perceive the e-filing system as useful, they are more likely to comply with tax regulations. Based on the study's findings, conclusions, and recommendations, it is suggested that additional research be performed to better understand the psychological and behavioral aspects that influence SMEs' adoption and consistent usage of e-filing systems. Such a study may look into how characteristics like trust in government institutions and perceived fairness of the tax system affect e-filing uptake.

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