Effect of Tax Knowledge on Residential Rental Income Tax Compliance Among Landlords in Embu Municipality, Embu County, Kenya

Abstract

Tax compliance is a big challenge facing small, medium, and large taxpayers, and governments in both developed and developing countries, because it threatens the capacity of tax authorities to raise expected revenue. Therefore, the study aimed to establish the effect of tax knowledge on residential rental tax compliance among landlords in Embu Municipality, Embu County, Kenya. The study was guided by social learning theory. An Explanatory research design was adopted for this study, targeting a population of 2600 landlords, with a sample size of 346 respondents in Embu Municipality, using a simple random sampling technique. Of the 346 questionnaires that were administered, 265 were properly filled out and returned, which represents a 76.6 % response rate. Primary data was collected through the use of closed-ended questionnaires. The study found that tax knowledge has a significantly positive effect on residential rental income tax compliance (β = 0.138, p = .026). Based on the findings, the study recommends that the government should develop comprehensive taxpayer education programs specifically tailored for landlords in the residential rental sector. These programs should simplify complex tax concepts and be delivered through accessible channels to improve fiscal literacy. Future research should investigate the effects of moral obligations on residential rental income tax compliance.