Abstract

Tax is an important stream of revenue for any government’s development projects in both developed and developing economies. The main purpose of this study was to determine the effect of digitalization effectiveness on turnover tax compliance among small and medium size enterprises in Eastleigh, Nairobi County. The specific objectives that guided the research were: to study the relationship between technological ease of use and turnover tax compliance; to establish the relationship between technology usefulness and turnover tax compliance and to examine the relationship between system security mechanism and turnover tax compliance among small and medium size textile enterprises. This study was grounded on Technology Acceptance Model and Unified theory of Acceptance and use of Technology. Descriptive research design was applied in this study. The target population was textile enterprises operating in Eastleigh Avenue. Stratified sampling technique was utilized since the population itself was stratified in nature. Yamane's formula was used to determine the sample size of 243 textile SMEs. Data was collected using questionnaires and analyzed descriptively. To establish the relationship between study variables correlations and regression analyses were carried out. The study findings revealed that regression coefficient for technological ease of use, technology usefulness and system security mechanisms had (β = .098,.311 and .129) had positive and significant relationship with turnover tax compliance. The study concludes that technology facilitates compliance by reducing user effort and increasing openness to new technologies. It recommends that the Kenya Revenue Authority (KRA) ensure their digital systems are user-friendly, reliable, and effective. Enhancing the online system's ease of use, reliability, and functionality could improve the efficiency and convenience of tax filing, fostering a positive user experience and greater compliance.