Abstract

Taxation is the critical source of revenue that the government of Kenya uses to provide public
services to its citizens. Failure by KRA to meet its revenue targets for the period 2017/2018,
can be attributed to the non-compliance of SMEs. Several SMEs, especially in the informal
sector, are not taxed again raising equity questions. This study aimed at establishing the effects
of tax reforms on tax compliance of SMEs in Nairobi County. The study adopted a quantitative
research approach with close-ended questionnaires. The research design for the study was
cross-sectional and correlational. Questionnaires were received from 135 managers of SMEs,
and data analysed with the help of SPSS v24.0. The study established that administrative tax
reforms are a significant influence in shaping the decisions for the tax compliance of SMEs;
The overall study model was substantial. This implies that policy tax reforms have a
considerable impact on decisions for tax compliance for SMEs and technological tax reforms
have a relative influence on tax compliance decisions by SMEs. The study has linked
administrative tax reforms, policy tax reforms, technical tax reforms, and tax compliance. The
study recommends that KRA should do more in implementing reforms and such as publicize
the prosecution of non-tax compliant, provide an incentive for compliance given, provide the
opportunity for voluntary compliance.