EFFECTS OF MULTIPLE TAXATION ON PROFITABILITY OF

SMALL SCALE ENTERPRISES IN MIGORI COUNTY

TITLE: RESEARCH PROJECT

NAME OF PRESENTER: OTIENO PATRICK AKUMU

INDEX NUMBER: 5032100383

CENTRER NUMBER: 5032100

COURSE CODE : 2804

PAPER CODE: 307A

CENTRE NAME: THE KENYA NATIONAL POLYTECHNIC

SUPERVISOR: IAN AMBUNE ENDOVO

PRESENTED TO : THE KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILLMERNT

FOR THE AWARD OF A DIPLOMA IN

ACCOCUNTING

EXAM SERIES: JULY 2023

i
 DECLARATION

This is my original work and has not been presented for any award of certificate in any other

academic or non-institution.

NAME OF PRESENTER Otieno Patrick Akumu SIGN ………. DATE……….

NAME OF SUPERVISOR Mr Ian Ambune Endovo SIGN……..DATE………..

ii
 ACKNOLEDGEMENT

I thank God for life and for the opportunity to complete this research proposal.My sincere

appreciation goes to my supervisor Mr.Ian Ambune Endovo for his guidance and patience

throughout the period of research proposal writing . I thank Kitale national polytechnic

administration for giving me the platform to study and carry out this research.Thank you and and

God bless you all.

iii
 DEDICATION

This work is dedicated to my parents,Mr.Pius Akumu Orero and Mrs.linet Adhiambo Akumu for

all the sacrifices,patience and commitment inclusion of the challenges you faced in educating

and making me more enlightened.May the almighty God bless you abundantly.I also dedicate

this piece of work to my supervisor Ian Ambune endovo for providing me with his professional

guidance,encouragement and his time during the research process. Lastly but not the least, I also

dedicate this piece of work to my brothers and sisters and even my classmate for their correction

throughout the research process.

iv
 ABSTRACT

This study sought to examine the effect of multiple taxation on profitability of small scale

enterprises in Migori county. Over the Small scale enterprises have been an avenue of job

creation and empowerment of Kenya citizens, contributing 70% of gross domestic product and

providing about 80% of all jobs in Kenya . However, the mortality rate of these small firms is

very high. Among the factors responsible for these untimely close-ups are tax related issues,

ranging from multiple taxation to enormous tax burdens. The study therefore sought to address

the following specific objectives; to determine the effect of value added tax on the profitability of

smallscale enterprises in Migori county , to evaluate the effect of income tax on the profitability

of small scale enterprises in Migori county ,to evaluate the effects of income tax on the

profitability of small scale enterprises in Migori county and to assess the effects of excise tax on

the profitability of small scale enterprises in Migori county.

The study was anchored on three theories, ability to pay theory; benefit theory of taxation and

kalicines theory of taxation where people say more about VAT, income and excitons tax on how

they affects the profitability of small scale enterprises positive in Migori county .The study

sought out the principle of simplicity in taxation which was later introduced by having a harbor

master who ensured that all taxes were paid. The research adopted cross-sectional survey

research design .The target population of this study comprised of 13 small scale enterprises,

which included three retail shops 4 hardware shops, 3 groceries and 3 in general

administration .This research targeted a total population of 2000 simple random sampling has

used to select the sample size from the different smallscale enterprises. This study uses structured

questionnaires who used to gather information on independent and dependent factors from

owners of the chosen firms. The data collection was analyzed using measure of dispersion,

v
measure of relationship and measure of location. The data analyzed was presented using tables,

charts and graphs.

vi
 ACRONYM

SME – small and medium enterprises

VAT – Value added tax

S.S.E.s – Small scale enterprises

K.R.A – Kenya revenue authority

P.A.Y.E – Pay as you earn.

vii
 DEFINATION OF KEYTERMS

Income tax is tax charged annually on the income of individual taxpayers or corporate usingh a

specified tax rate (Goerke,2015)

Excise tax,This is duly imposed on goods manufactured in kenya or imported in kenya specified

in the 1st schedule to excise duly act 2015 (mwanyi,2014)

Multiple taxation – is when a single amount of money is taxed for more than once, often by two

or more different authorization (sutro 2018)

Small scale enterprises – business entities that have a maximum annual sale turnover of Ksh

500,000 and that employ less than ten individuals (ansung & agyemany 2017)

Tax – a compulsory charged levied by a government to raise revenue,levied on the income or

property of persons or organizations,(Downer 2016)

Value added tax – a form of consumption tax charged on products whenever value is added at

every stay of the supply chain up to the point of sale (AIM,J & El – ganainy (2016)

Table of Contents

viii
DECLARATION.......................................................................................................................................ii
ACKNOLEDGEMENT............................................................................................................................iii
DEDICATION..........................................................................................................................................iv
ABSTRACT...............................................................................................................................................v
ACRONYM..............................................................................................................................................vii
DEFINATION OF KEYTERMS...........................................................................................................viii
CHAPTER ONE........................................................................................................................................1
1.0.INTRUCTION.................................................................................................................................1
1.1. BACKGROUND OF THE STUDY...............................................................................................1
1.2. STATEMENT OF THE PROBLEM............................................................................................3
1.3 OBJECTIVES......................................................................................................................................3
1.3.1. GENERAL OBJECTIVES......................................................................................................3
1.3.2. SPECIFIC OBJECTIVES.......................................................................................................3
1.4. RESEARCH QUESTIONS............................................................................................................3
1.5. SIGNIFICANCE OF THE STUDY...............................................................................................4
1.6. SCOPE OF THE STUDY...............................................................................................................4
1.7 CONCEPTUAL FRAMEWORK...................................................................................................4
CHAPTER TWO.......................................................................................................................................5
LITERATURE REVIEW.........................................................................................................................5
2.0 INTRODUCTION...........................................................................................................................5
2.1. EXSICE TAX..................................................................................................................................5
2.2. VALUE ADDED TAX....................................................................................................................6
2.3. INCOME TAX................................................................................................................................8
2.4. PROFITABILITY..........................................................................................................................9
CHAPTER THREE.................................................................................................................................10
3.0 RESEARCH METHODOLOGY.................................................................................................10
3.1 INTRODUCTION.........................................................................................................................10
3.2 RESEARCH DESIGN...................................................................................................................10
3.3 TARGET POPULATION.............................................................................................................10
3.4. SAMPLING SIZE.........................................................................................................................11
3.5. DATA COLLECTION.................................................................................................................11
3.6 DATA ANALYSIS AND PRESENTATION...............................................................................12
3.6.1 DATA PRESENTATION.......................................................................................................12

ix
 3.6.2 DATA ANALYSIS..................................................................................................................12
CHAPTER FOUR...................................................................................................................................13
FINDING DISCUSSION CONCLUSION AND RECOMMENDATIONS........................................13
4.0 INTRODUCTION.........................................................................................................................13
4.1 BIO DATA.....................................................................................................................................13
4.1.1 GENDER.................................................................................................................................13
4.1.2 RESPONSE ON THE LEVEL OF EDUCATION OF THE RESPONDENT....................14
4.1.3 RESPONSE ON THE RELIGION OF THE RESPONDANT............................................16
4.1.4 Response working period in the organization.......................................................................17
4.2 EXCISE TAX.................................................................................................................................18
4.2.1.The study sought to assess if excise tax is reported on self-assessment basis......................18
4.2.2. Excise tax is a sign in – phase tax,levied once at import or at production stage within the
country..............................................................................................................................................19
4.2.3.Please tell which of them comes closest to your own view about excise tax........................20
4.2.4.Excise tax as an effective to an increasing revenue..............................................................21
4.3.VALUE ADDED TAX...................................................................................................................23
4.3.1 Vat taxation affects the profitability of the business............................................................23
4.3.2 The research was focused to determine the size of enterprises has direct impact on its
ability to administer and manage the VAT function internally for profitability........................25
4.3.3 The research sought to determine the VAT filling process is simple and user friendly In
determining profitability of your business.....................................................................................26
4.3.4. The research sought to assess current VAT rates is favourable to the profitability of your
business.............................................................................................................................................27
4.4 INCOME TAX...............................................................................................................................29
4.4.1 the study sought to evaluate the income tax has been there since independence in Kenya.
...........................................................................................................................................................29
4.4.2.The study sought to determine if small scale enterprises are required to pay income tax in
KRA periodically.............................................................................................................................31
4.4.3 The study sought to determine if income tax rate is highly in Kenya compared to east
Africa countries...............................................................................................................................32
4.4.4. The income tax charges have an impact on the cash flow of the business.........................34
REFERENCES........................................................................................................................................36
APPENDIX..............................................................................................................................................38
Appendix 1:RESEARCH BUDGET......................................................................................................38

x
xi
 CHAPTER ONE

1.0.INTRUCTION

This chapter presents the background of the study ,statement of the problem ,purpose of the

study,objectives of the study,research questions and significance of the study and even

conceptual frame work.

1.1. BACKGROUND OF THE STUDY

Small and medium enterprises are an essential in the economic growth and development of every

nation (Atawodi 2015)Government plays great role in any national economy. This is particularly

true in the developing countries where government has to initiate and promote economic

development (zubairu,2013). To achieve its purpose ,government uses different instruments to

mobilize funds and channel same to the provision of essential services and a

amenities ;protection of its nationals,provision education ,health care services etc,(Zubairu

2013)By so jorny ,the government raises revenue which takes a number of different forms such

as taxation borrowing ,grant , rent royalties, fees and other charges(zubairu 2013)

War,democracy and revolution are key themes in the history of taxation.In turn taxation is often a

key them in war.Democracy and revolution.Tax is both a cause and consequence of revolution

and in the cause of income tax, a consequence of capital development and expansion and the

wars that go dand in hand with that development and expansion.There is an intertwining of

tax,war democracy and revolution that confirms Schumpeter is argument,(Schumpeter 1991)

borrowing language of golds-held for a new school of study ,fiscal sociology .Asschumpeter

(1991 p 100) says there is both a causal importance of fiscal policy (insoter as fiscal event are

element in the causation of all change)and of the symptomatic significance. He sees the

1
symptomatic significance of fiscal history as even more important than its casual significance

because tax is the thunder of world history.(Schumpeter 1991 p 101)

The ability of a government to false taxes and the strategies deployed to do so are a core features

of state capacity for this reason the history of taxation is narrowly intertwined with that of state

building (moore 1966,north 1990,tilly 1990)The dismantlement of the states identify and

practices Kenya before colonization was made up of a myriad of tribal based societies all with

their own fixed ethnic geographical territory .African society in precolonial time can be termed

as a communist socialist society where almost all the community wealth.This includes part of

any harvest whether it was agricultural produce ,trading profits or gifts .Both foreign and local

trader especially in ivory and slaves were all required to pay tithes in order be allowed passage

through the territory of a particular tribe (waris 2007)

The principal of simplicity in taxation was later introduced by having a harbour master who

ensured that all taxes were paid.In this era,the amount due was a lower percentage of the value of

the goods trades. Interestingly there were no allegation of tax evasion and avoidance tabulated in

the time of occupation of the cost (waris 2007)But with the coming pf Portuguese occupation

that was notoriously violent and wanted to hold and control the east coast as it was important

port end route to and from India and the far east.

By the end of the rule of Arabs and Portuguese the existing tax payable per head of slave

exported and customs revenue shared equally between the Arabs and Portuguese .The tax base

was ,however,limited to traders only.The British originally ruled what is today Kenya and

Uganda together forming the east African protectorate and later the east African colony .British

colonial tax policy developed mostly on the grounds that British needed to support its own

2
economy by creating foreign markets and sources of raw materials for its industries,thus

obtaining maximum gains with minimum input (waris 2007)

1.2. STATEMENT OF THE PROBLEM

Although there is a general perception that tax is an important source of fund for development of

the economy and provision of social services ,the problem faced are in the area to negative

relationship between taxes and the business ability to sustain itself and to expand small scale

enterprises are faced with the problem of high tax rates,multiple taxation complex tax regulation

and lack of proper enlightenment or education about tax related issues.

1.3 OBJECTIVES

1.3.1. GENERAL OBJECTIVES

The effect of multiple taxation on profitability of small scale enterprises inMigoricounty.

1.3.2. SPECIFIC OBJECTIVES

To asses the effects of excise tax on the profitability of small scale enterprises in Migori county.

To determine the effects of value added tax on profitability of small scale enterprises in Migori

county.

To determine the effects of income tax on the profitability of small scale enterprises in Migori

county.

1.4. RESEARCH QUESTIONS

What is the effect of excise tax on the profitability of small scale enterprises in Migori county.

What is the effect of values added tax on profitability of small scale enterprises in Migori

county?

3
What is the effect of income tax on the profitability of small scale enterprises in Migori county?

1.5. SIGNIFICANCE OF THE STUDY

The findings of the study contributed to the existing literature about taxation and the effect it

causes to the economy ,a whole to the tax authority and government ,the study was to guide them

in adjusting the effects of multiple taxation and profitability of small scale enterprises .The

traders will learn their duties as tax payer.Taxes being one of the operation costs of business and

are involuntary.The legislation (county and legislation)will be informed on areas to amend in the

tax act and includes parts that serves the public whole somely Kenya revenue authority (KRA)

will use appropriate methods when collecting taxes,while Awendo sub-county will revise tax

rates and make the necessary adjustment that will grow the county.The findings of the study and

its integration as it will inform the tax rates to be applied on exports and imports among nations.

1.6. SCOPE OF THE STUDY

This study focused on the effects of multiple taxation on the profitability of small scale

enterprises in Migori county.The study tagged 120 licensed retailers and 100 licensed

wholesalers in Awendo sub-county.The study look a period of six month including data

collections and analysis from February to July 2023.

1.7 CONCEPTUAL FRAMEWORK

EXCISE TAX

VAT PROFITABILITY

4
 INCOME TAX

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

In this chapter literature which is related to and consistent with the objectives of this study is

reviewed and objectives are also discussed such as excise taxes,VAT and income tax.

2.1. EXSICE TAX

According to menjo and kutut (2015)this is a duty of excises imposed on goods manufactured in

Kenya or imported into Kenya and specified in the first schedule to excise duty act,2015

companies and partnerships dealing in excusable good and services are required to pay excise

duty.The list and types of excusable goods and services are listed in the 5 th schedule as read

together with the section 117 (1) (d) of the customs and excise act CAP 472 laws of Kenya .They

includes ,mineral water,juices,soft drink,cosmetic and preparations for use on hair,mobile cellular

,phone services,fees charged for money transfer among others.

Other beer made from malt and opaque beer excise taxes are charges on every unit of the

commodity sold or services entered instead of percentage one of the main goals of charging

excise by the government apart from raising revenue is to discourage the consumption certain

products (alcohol,cigarette and betting services) or services considered detrimental to the society

(mwangi 2014.)

5
According to deletive and miluevi (2017)excise taxes based on the British concept and consistent

with many common wealth countries is a tax levied on production instead of sale imposed only

on commodities and not on production services on domestic activities at a specific rate and

quantitative control.This modern concept is significantly broader and applies to either sale or

production of domestic or imported type with either specified ad-valorem rates with physical

account or control and can apply to services as well.Excise taxes are an important means of

revenue collection by both the national and county government since most of small scale

enterprises depends largely on these products for their business operations,reduced consumption

will affect their cash-flow negatively and in turn hinder the growth of these enterprises and hence

profitability since the amount of excusable goods consumed is an important function of excise

duty ,raising excise taxes results in the overall reduction in the quantity sold as the prices

consumers pay increase and revenues producers get reduce (herath and Mahmood 2015)

Excise taxes are measured in two main way as cash payment which is the method commonly

used by most traders and business owners and it can be measured by determining the loss

imposed on the tax payer as a consequence of the excise .Another measurement is that of

reduction of customers profit and surplus induced by the excise tax which is a common method

widely used by micro and public economists .This form of measurement relies on the extent of

the reduction of market transaction (mwangi 2014)

2.2. VALUE ADDED TAX

Aim and El-gancing (2016) argues that the main basis for taxing consumption rather than ones

income is the fact that consumption taxes tend to discourage level of consumption while

encouraging saving such provisions help generate higher level of economic growth value added

tax is abroad based consumption taxation that has a direct impact on he operations of business

6
and taxpayers.Findings by AIM and El-ganainy (2016) show that VAT tax rate has a negative

corrections with the prevailing level of aggregate consumption in a nations economy.VAT tax

targets the consumer of the products generated by small scale enterprises and this ensures that the

business do not fool obligated to pay for services beyond what they use in the society.The use of

a consumption tax sch as VAT affects other aspects of the small scale enterprises and the

economic environment including tax evasion labor supply and the portfolio choices (Aim and El-

ganaiy 2016)

Zafiris (2016) posts that VAT is a progressive consumption tax that requires business to collect

the consumption tax that is imposed on goods sold or distributed .Moreover ,business are

allowed to claim a credit for consumption tax they had previously paid on inputs .value added

tax affects uniformly of the factor incomes that are produces within the enterprises .Subsequently

the value added tax excluded the costs arising from materials and the unfinished

products.Subsequently ,firms are forced to specialize on what they do best by having a

distinctive competition edge in the industry.Value added tax supports small scale enterprises

through contractual and entrepreneurial resource (zafiris 2016)

The use of VAT as part of the tax regime helps achieve neutrally and adds advantages through

better use of entrepreneurial inputs. value added tax is a form of taxation that facilitates

enforcement through a comprehensive incentive structure (Pomeranz 2015)VAT is a significant

revenue component for most revenue administration globally .Subsequently ,VAT collection

determine the social goods that taxpayer enjoy in the society VAT is self-enforcing such that

business have to deal with the logistic with consumers and the supplies within the logistic chain

VAT can be measured by tax rate,VAT credits and information flows.

7
2.3. INCOME TAX

Income taxation regime is a form of direct tax charged on the revenues generation by the

individuals(isaya ,208) income taxation can be on the individual or a corporation where a set tax

rate applies to the final profit that the business generation by individuals and non-individuals

taxpayers.The type of income,charged under the income tax policy includes interest income

capital gains and sale of financial investment (Ngek 2018).The rate of income tax depends on the

category in which the level of income lies.Subsequently ,the level of income determines how

much the taxpayer or is charged by the revenue administrator.Income taxation for companies

affects their productivity and level of production of goods and services (isaya 2018) .The

corporate income tax is charged on the supplies of revenues minus expenses .

Dinis et al (2017) argues that the income tax regime helps develop a clear view of financial

consequences of the taxation in business .Tax burdens charged on business influence the

management decision since income tax targets the income of the small scale enterprises rather

than consumption in the economy.On the other hand,the findings by Dinis et al (2017)indicate

that a reduction in the rate of income tax does not lead to a concomitant reduction in tax burden.

Menjo and kotut (2015) assert that company income taxation has a significant role in the

developing economies.There are many critics who argue that taxing the income of the corporate

and small scale enterprises discourage the level of productivity and should focus on the

consumption side of economy.

Income tax can be measured inform of liquidity of small scale enterprises,tax regulations and

income charged.

8
2.4. PROFITABILITY

Financing of any business entity is a complex undertaking that begins with assessment of the

financial needs of the organization.Small scale enterprises face this challenge on a regular basis

when they are handling payroll or seeking to expand (Samuel 2018)The profitability of small

scale enterprises require tangible resources that serve as inputs to the business and enable the

business owner undertake daily operation efficiency.The biggest challenge to small scale

enterprises growth is the limited access to finance or availability of cash flow within the business

organization(Herath and Mahmood 2015)Subsequently, the profitability of small scale

enterprises directly depends on the financial resources available to the organization unfortunately

small scale enterprise face a difficult time seeking funds from bank and micro -finance institution

that insist on rigid regulations to release funds,similarly ,tax obligation exert cash flow pressure

on the small scale enterprises (Mwangi 2014)

According to the income tax act (1997) profitability or small scale business are those with

growth turnover of less than 50 million shillings per anam. In Kenya,it is not only income tax act

that has tried to define small scale enterprises there are also institutions,which have tried to

define profitability of small scale enterprises such as ministry of finance planning and economic

development .The ministry of finance planning and economic development defines small scale

enterprises as those with employees between 1 – 25 people and assets and capital exceeding ksh

1,000,000 .Tax assessment has profitability thus is important that assessment be carried out

accurately so that taxpayers are not excessively assessed.This research will used profit to

measures profitability of small scale enterprise.

9
 CHAPTER THREE.

3.0 RESEARCH METHODOLOGY

3.1 INTRODUCTION

This chapter highlighted the procedures followed in the whole research process. It expounded on

the research design the study population sample size data collection methods and data process

analysis and presentation and the challenges of the research.

3.2 RESEARCH DESIGN

Research design refer to the method used to carry out research (Mugenda 2013). This study

adopted across- sectional survey design as a blue print to guide the research process in cross-

sectional survey, a researcher collects information from a sample draw form a population and

involves collecting data at one point in time or over a short period of time to provide a snapshot

of the variable of interest of a specific (Churchill at all 2010). Cross- section studies investigate

the relationship between variable and involves the selection of a relatively large sample of

respondent from a per-determined population (the target population) followed by the collection

of data from the respondent. It can provide information about what is happening in a population

is describe what’s happening at the present moment.

3.3 TARGET POPULATION

The target population is defined as the overall group of elements of concern to be studied by the

investigator (Kothari & Gauras 2014). This study targeted small scale enterprise licensed in

Migori County. Record about the small-scale enterprises were obtained from Migori County

Integrated Development plan. The study comprised of a population of 13 small scale enterprises

and 3 dealers in general merchandise. This research targets a total population of 2000.

10
3.4. SAMPLING SIZE

According to Mugenda (2013) a sample size is a small proportion of a population selected for

observation and analysis .This sub-set was carefully selected so as to be representative of the

whole population. Gay and Diehl (2012) suggests that for correction research 30 case or more are

required .For description studies 10 percent of the accession population is enough and for

experimental studies involved 60 respondents.This sample size was assumed by the research to

be representative enough of the entire population.

3.5. DATA COLLECTION

Structure questionnaires were used to gather information on independent factors from owners of

the chosen firm in order to quantity data,the questionnaire consisted of close ended questions

measure on a liker scale 1-5 (kothari and guarav 2014) .The questionnaire technique was used

because it was economical ,it guaranteed confidentially ,it allowed standardized questions to be

used.It gave the respondent sufficient time to think about what to answer and it was simple to

answer question (Nayok & singh 2015).The questionnaire was designed to address each of the

variable of the study and was divided into section .Section A covered small scale enterprises

profile about the respondent and the contextual factors,while the rest of the section covered study

variables.Questionnaires were chosen because they are easy to analyze data.

11
3.6 DATA ANALYSIS AND PRESENTATION

3.6.1 DATA PRESENTATION

Data analysis will be presented using tables ,charts and graph

3.6.2 DATA ANALYSIS

Data analysis is the process of bringing order structure and meaning to the collected data

(Kothari & Gauras 2014). The data analysis will be analysis using measure of dispersion,

measure of relationship and measure of location.

12
 CHAPTER FOUR

FINDING DISCUSSION CONCLUSION AND RECOMMENDATIONS

4.0 INTRODUCTION

This chapter addressed of the following areas on the effect multiple taxation on profitability of

small-scale enterprises in Migori County summary of finding Discussion concussions and

recommendation. This chapter captured an analysis on response rate.

4.1 BIO DATA

4.1.1 GENDER

The study considered both male and female them turn the respondent were asked to state their

gender and the following data was obtained.

Response Frequency Percentage %

Male 7 54

Female 6 46

Total 13 100

13
 GENDER
56%

54%

52%

50%

48%

46%

44%

42%
RESPONDENTS

MALE FEMALE Series3

The result indicates that most of the respondents were male 7 and female 6. This indicated that

males dominated in the sample. The highest percentage of 54% respondent male and 46%

respondent female. This implies that this organization sector seems to employ more male than

female hence they should employ more female to meet the constitution of a third gender rule.

4.1.2 RESPONSE ON THE LEVEL OF EDUCATION OF THE RESPONDENT

Response Frequency Percentage %

Certificate 4 31

Diploma 4 31

Degree 5 38

PHD 0 0

14
 TOTAL 13 100

EDUCATION LEVEL

31%

38%

31%

CERTIFICATE DIPLOMA DEGREE 4th Qtr

The result indicates that most of the respondent was those with Degree level aim 5, Diploma

level 4, certificate level are 4 and the lost was PHD with none. This impairs that 31% of the

respondent who work at Migori County small sale enterprises were certificate holders followed

by those at Diploma level 31%, 38% were degree holder from the above presentation the

research realized that the bigger percentage of respondent were having a degree and the least

group were those of certificates and none mashers ,meaning that at Migori County considers

education and experience when selecting its employees to ensure profit segment there it should

uphold the present standard as far as multiple taxation on profitability of small scale business is

concerned as mentioned above

15
4.1.3 RESPONSE ON THE RELIGION OF THE RESPONDANT

Response Frequency Percentage %

Christianity 13 100

Muslim 0 0

Hinduism 0 0

Total 13 100

RELIGION

13

CHRISTIANITY ,USLIM HINDUISM

The out comps depicted in that respondent with the highest turn over was Christianity. The

researcher realized that the bigger percentages of respondent were those of Christianity of 100%

and other religion there none of the respondent who are other religion like Muslim and

Hinduism, This impulse that at Migori county consider Christianity than other religion when

selecting .ITS EMPLOYEES.

16
4.1.4 Response working period in the organization.

RESPONSE FREQUENCY PERCENTAGE

1-2 20%

3-4 60%

Over 6 20%

TOTAL 13 100%

Chart Title
70
60
50
40
30
20
10
0
One to Two three to four over six

Column1 Column2 Column3

The results are as shown shows that 20% of the respondents were aged between 1 – 2 years in

that particular organization,60% were between 3 – 4 years and 20% were over 6 years working

period in that particular organization.This implies that the majority of the employees are between

3 – 4 years.

The highest percentage on 60% implies that Migori county is sale as far as multiple taxation is

concerned .The employees who had working period of 3 – 4 years are highly committed at work

because of the need to stabilize in their career and earn a livelihood as evidenced.Those of over 6

years and above means that when people reach their old age,they always have the demand to

secure their retirement moments at their respective origins ,their responsibilities also increase

hence always have no time for organization tasks.

17
4.2 EXCISE TAX

4.2.1.The study sought to assess if excise tax is reported on self-assessment basis.

respondent frequency Percentage

Yes 11 80

no 2 20

Total 13 100

Chart Title
90
80
70
60
50
40
30
20
10
0
YES NO

Series 1 Series 2 Series 3

Out of 13 questionnaire 11 respondents respond positive towards the excise tax is reported on

self -assessment basis while 2 respondent respond negatively and disagreed that excise tax is not

reported on self -assessment basis. This implies that the respondent rate was summarize by the

researcher that the highest percentage rate was those who respond positively brings to 80%.agree

and 20% disagreed .This means that the small scale enterprises in migori county considered

excise tax is reported on self – assessment basis.

18
4.2.2. Excise tax is a sign in – phase tax,levied once at import or at production stage within

the country.

On the second variable,the respondents were further asked to indicate the extend in which they

agree.

Strongly agree,disagree,strongly disagree and not sure with the various statement on excise tax

as a single phase tax.The study found out that majority of small scale enterprises in Migori

county,agreed with excise tax as a single-phase of 6 respondents,5 strongly agree,2 not sure and

there was none who either disagreed ore strongly disagreed.The study further found out that

more than 47% of the respondents agree,38% of the respondent strongly agreed towards excise

tax as a single phase 4% not sure and none either disagree,strongly or disagree.This means that

they should improve on excise tax so that they can improve their profitability on production.

EXISE TAX

2; 15% STRONGLY AGREE

AGREE
6; 46% STRONGLY DISAGREE
DISAGREE
5; 38% NOT SURE

19
 response frequency Percentage

Strongly agree 6 47

Agree 5 38

Strongly disagree 0

Disagree 0

Not sure 2 15

total 13 100

4.2.3.Please tell which of them comes closest to your own view about excise tax

It was observed that out of 13 questionnaire all the respondents agree that excise tax is always

acceptable .According to the respondent view on excise tax,the respondents rate was 100%

strongly agree towards excise tax that it is always acceptable in business.This implies that small

scale enterprises in Migori county always accept excise tax so that they can improve there

profitability and always acceptable and it might affect the profitability of the business if not

taken good care of.

respondence frequency Percentage

It is always acceptable 13 100

It is mostly unacceptable 0

Not sure 0

total 13 100

20
 Chart Title
14
13

12

10

0 0
0
RESPONDENTS

IT IS ALWAYS ACCEPTABLE IT IS MOSTLY ACCEPTABLE NOT SURE

4.2.4.Excise tax as an effective to an increasing revenue

The forth research objection to that excise tax is typically seen as an effective to an increasing

revenue on small business in Migori county.The study was presented based on the findings from

the field as presented in the values assessed below.The study findings provided that out of 13

questionnaire 5 respondents agree,5 respondents also disagree according to their views about

excise tax on increasing revenue,2 respondents strongly disagreed 1 respondent was not sure

about excise tax as an increasing revenue and none of respondent strongly agreed.This implies

that 38% of the respondents agreed,38 disagreed,15% strongly disagreed and 8% of the

respondent were not sure.This research observed that excise is not seen as an effective to an

increasing revenue according to the respondent view,therefore,excise tax does not affect the

revenue of the county or profitability of the small scale enterprises in Migori county.

RESPONSE FREQUENCY PERCENTAGE

21
Agree 5 38%

Strongly agree 0 0%

Disagree 5 38%

Strongly disagree 2 15%

Not sure 1 8%

TOTAL 13 100%

Sales
agree strongly disagree disagree not sure

8%

38%

38%

15%

22
4.3.VALUE ADDED TAX.

4.3.1 Vat taxation affects the profitability of the business.

The study sought to determine how VAT affects the profitability of the small business.The study

sought out 13 questionnaires of which the respondents level or agreement on the profitability of

the small business was,4 respondent strongly agree that VAT taxation affects the profitability 5

respondents agree,2 respondent strongly disagreed and it was also observed by the researcher

that 2 respondent also join hand together and disagree that VAT does not affect the profitability

of small scale business.The respondent rate was summarize as follows;31% strongly agree,38%

agreed,15 % disagreed and 15% also strongly disagreed .This implies that majority seems that

VAT taxation affects the profitability of small scale enterprises in Migori county hence the rate of

VAT tax should be reduces when levied on small scale enterprises.

RESPONSE FREQUENCY PERCENTAGE

Agree 5 38%

Strongly agree 4 31%

Disagree 2 15%

Strongly disagree 2 15%

Not sure - -

TOTAL 13 100%

23
 VALUE ADDED TAX
6

5
5

4
4

2 2
2

0
0
RESPONDENTS

AGREE STRONGLY AGREE DISAGREE

STRONGLY DISAGREE NOT SURE

4.3.2 The research was focused to determine the size of enterprises has direct impact on its

ability to administer and manage the VAT function internally for profitability.

It was observed that out of 13 questionnaire ,7 respondent strongly agree toward VAT as an

impact,4 respondent strongly agree,2 respondent strongly disagree and none of the respondent

either disagree or not sure .This finding is consistent that the use of consumption tax such as VAT

affects other aspects of the small scale enterprise and the economic environment including tax

evasion,labor supply and the portfolio choice.The respondent rate was summarize as 54%

respondent agreed,31% of the respondent strongly agreed,15% of the respondent strongly

disagreed and none disagreed or not sure.The research observed that VAT is a direct impact

according to the respondent view.

respondent frequency Percentage

Agree 7 54

24
 Strongly agree 4 31

Disagreed 0 0

Strongly disagree 2 15

Not sure 0 0

total 13 100

VALUE ADDED TAX

STRONLGY
DISAGREE; 15%

AGREE; 54%

STRONGLY
AGREE; 31%

4.3.3 The research sought to determine the VAT filling process is simple and user friendly

In determining profitability of your business.

The research sought out 13 questionnaire of which the statement that VAT filling process is

simple and user friendly was summarized by the statement,4 respondent was not sure about

statement,2 respondents disagreed,2 respondent agreed and 1 respondent strongly disagreed.This

25
implies that VAT filling process is simple and user friendly in determining profitability of your

business.The respondent disagreed,15% respondents agreed and 8% respondent strongly

disagreed.VAT was found to be satisfactory in explaining profitability of small scale enterprises,

Further, results shows that VAT are good predictors of profitability of small scale enterprises

KRA officers have provided adequate information regarding VAT processing and filing.

respondent frequency Percentage

Strongly agreed 4 31

Agreed 2 15

Strongly disagreed 1 8

disagreed 2 15

Not sure 4 31

total 13 100

26
 Chart Title
35

30

25

20

15

10

0
strongly agree not sure agree disagree strongly disagree

Series 1 Series 2 Series 3 Series 4 Series 5

4.3.4. The research sought to assess current VAT rates is favourable to the profitability of

your business.

The researcher sought out 13 questionnaire of which 6 respondent agree to the statement ,3

respondent disagreed, 2 respondent was not sure about the statement ,2 respondent strongly

disagreed and none of the respondent either strongly agreed or support the statement ,this study

brings the observed in conclusion that 46% respondent agreed,23% disagreed,15% not sure,15%

respondent strongly disagreed and 0% strongly agreed.Correlation analysis revealed that VAT

were positively and significantly associated to profitability of small scale enterprises.Regression

or coefficient revealed that there was a positive and significant relationship between VAT and

profitability of small scale enterprises.This means that an improvement in VAT lead to an

improvement in profitability of SSF.

respondent Frequency Percentage

Strongly agree

27
 Agree 6 46

Strongly disagree 2 0

Disagree 3 23

Not sure 2 15

Total 3 100

Sales
agree disagree strongly disagree not sure

23%

36%

23%

18%

4.4 INCOME TAX

4.4.1 the study sought to evaluate the income tax has been there since independence in

Kenya.

On the first variable ,the respondent were further asked to indicate the extent in which they

strongly agree.agree,strongly disagree,disagree and not sure with the variable statement on

income tax has been there since independent in Kenya. The study found out that majority of the

small scale enterprises in Migori county agreed that income tax had been there since

28
independent in Kenya 7 respondent ,5 respondent were not sure, 1 respondent disagreed and

none of the respondent either strongly agree,strongly disagree,this brings the respondent rate to

be summarized as 54% agree,38% not sure, 8% disagree and 0% either strongly agree or strongly

disagree.The researcher observed that majority in Migori county considered income tax that its

has been there since independent in Kenya for them to improve in their profitability of SSF,the

government must reduce the levied on income tax when they are been charged on small scale

enterprises to improve profitability.

RESPONDENTS FREQUENCY PERCENTAGE

Agree 7 54%

Strongly agree - -

Disagree - 0%

Strongly disagree 1 8%

Not sure 5 38%

Total 13 100%

Chart Title
60

50

40

30

20

10

0
agree not sure disagree

Series 1 Series 2 Series 3

29
4.4.2.The study sought to determine if small scale enterprises are required to pay income

tax in KRA periodically.

Out of 13 questionnaire send out by the researcher to the respondent 14 respondent supported the

variable statement that small scale enterprises are required to pay income tax in KRA

periodically and 2 respondent disagreed towards it.The respondent rate was 85% supported and

15% disagreed .This implies that the small scale enterprises in Migori county paid their income

tax rate in KRA periodically to enable them improve the profitability of their business,Further

results shows that income tax are good predictors of profitability of SSF.

RESPONSE FREQUENCY PERCENTAGE

Yess 11 85%

No 2 15%

TOTAL 13 100%

30
 15%

85%

yes no

4.4.3 The study sought to determine if income tax rate is highly in Kenya compared to east

Africa countries.

Out of 13 questionnaire send out to respondent by researcher 10 responded strongly agree that

income tax rate in Kenya is highly compared to east Africa,2 respondent agreed ,2 respondent

were not sure and none of the respondent neither disagreed nor strongly disagreed.The

respondent rate was summarized by researcher as 77% respondent strongly agreed,12%

agreed ,12% respondent were not sure and 0% either strongly disagreed .This implies that

majority of SSE in Migori county considered income tax rate in Kenya is highly compared to

east Africa .Tax burdens charged on business influence the management decisions since income

tax targets the income of the SSF rather than consumption in the economy .To eliminate the tax

burden among SSE brought about by income tax,policy matters should extend exemption to

31
transaction necessitated by regulatory changes,compulsory government acquisitions and internal

restrictions considering that such transaction are rarely undertaken for a commercial gain.

RESPONDENTS FREQUENCY PERCENTAGE

Agree 2 12%

Strongly agree 10 77%

Disagree - -

Strongly disagree - -

Not sure 1 11%%

Total 13 100%

Chart Title
90

80

70

60

50

40

30

20

10

0
agree strongly agree not sure

Series 1 Series 2 Series 3

32
4.4.4. The income tax charges have an impact on the cash flow of the business.

The researcher sought out this statement to assess if income tax charges have am impact on the

cash flow of the business.out of 13 questionnaire sought out by the researcher ,9 respondent

strongly agree that income tax charges are impact on the cash flow of the business ,4 respondent

agree and none neither strongly disagree ,disagree nor not sure .This brings the respondent rate

as 69% ,respondent strongly agreed,31% respondent agreed and 0% neither strongly

disagreed ,disagreed nor not sure.The researcher observed majority of SSE, in Migori county

strongly agreed that income tax charge are impact on cash flow of the business.Based on findings

,the study concluded that income tax has a positive and significant effects on profitability of SSE.

RESPONDENT FREQUENCY PERCENTAGE

Strongly agreed 9 69

Agreed 4 31

Strongly disagreed 0 0

Disagreed 0 0

Not sure 0 0

TOTAL 13 100

33
AGREED; 31%

STRONGLY
AGREED; 69%

34
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APPENDIX

Appendix 1:RESEARCH BUDGET

ITEM Cost (Ksh)

Typing pf questionnaires 60

Traveling 1000

Data analysis 200

Photocopying of questionnaires 130

Typing of the research 1000

TOTAL 2390

37