Effect of Legislative Reforms on Turnover Tax Compliance among Small-Scale Traders in Ruaraka Nairobi, Kenya

Turnover tax was introduced in 2008 as a simple tax to bring small and medium enterprises into the tax net. Small and medium enterprises play a critical function in the advancement of the Kenyan Economy. However, much remains to be done to achieve the desired results that were anticipated when TOT was introduced. The study aimed to determine the effects of legislative reforms on turnover tax compliance among small-scale traders in Ruaraka, sub-county, Nairobi, Kenya. The study was anchored on the Ability to pay theory and the Institutional Theory. An explanatory research design was employed in this study and the target population was 3,240small-scale traders in Ruaraka, sub-county Nairobi with a sample size of 356 respondents. Out of the 356 issued questionnaires, 299 were filled accurately and returned, signifying 84% response rate. The study collected primary data through a questionnaire, and the data was analyzed using descriptive and inferential statistics to determine the association between variables. The correlation matrix found that legislative reforms had a positive correlation of (r = 0.423) with turnover tax compliance, implying that improvements in legislative reforms can lead to higher turnover tax compliance. The regression analysis found that legislative reforms had a significant positive effect on Turnover tax compliance. (β = 0.286, p = 0.000). The study recommends that the government should focus on continuous updates and improvements to tax legislation are essential. Ensuring that tax laws are clear, fair, and easily understandable will help in maintaining high levels of compliance. Future research should investigate how inflation and economic growth influence turnover tax compliance.