Effect of Tax Morale on Corporation Tax Compliance among Manufacturing Firms in Ruaraka Sub-County, Nairobi, Kenya

Abstract

Corporation tax is a key source of revenue for most governments across the globe that enables them to provide public goods and services such as free education, subsidized medical services, and infrastructure. Despite the tremendous growth of the manufacturing industry for the past few years, the corresponding tax collection from the sector has remained very low. The key aim of the study was to determine the effects of tax morale on corporation tax compliance among manufacturing firms in Ruaraka Sub-County, Nairobi, Kenya. The study was anchored on the Tax Morale. An explanatory research design was employed in this study, and the study population was 219 manufacturing firms in Ruaraka Sub-County, Nairobi. A census survey was used in this study. The response rate for the questionnaire was 79.9%, with 175 out of 219 participants accurately filling and submitting the questionnaires, while the non-response rate was 20.1%. The study used primary data collected through questionnaires. The data collected was analyzed using descriptive statistics, inferential statistics, and multiple linear regression analysis, and presented through tables and charts. The study found that tax morale has a significant positive effect on corporation tax compliance (β = 0.495, p-value = 0.024). The study recommends that policymakers prioritize initiatives that foster intrinsic motivation among taxpayers. This can be achieved by promoting transparency, fairness, and trust in the tax system through public awareness campaigns and stakeholder engagement programs. Further studies could also explore the influence of cultural factors and social norms on tax compliance.