Effect of Intrinsic Factors on Advance Tax Compliance in the Transport and Logistics Sector in Kenya: A Case of Public Service Motor Vehicle Owners in Kasarani Sub-County, Nairobi City County

Abstract

Advance tax is a mandatory prepayment of income tax for commercial vehicle owners in Kenya and serves as an important mechanism for enhancing domestic revenue mobilization. However, compliance among Public Service Motor Vehicle (PSV) owners remains low despite regulatory requirements. This study examined the effect of intrinsic factors, specifically tax knowledge and tax enforcement, on advance tax compliance among Public Service Motor Vehicle owners in Kasarani Sub-County, Nairobi City County. The study adopted an explanatory research design targeting 725 PSV owners in Kasarani Sub-County. A sample of 257 respondents was selected using simple random sampling, yielding 212 valid responses. Primary data were collected using semi-structured questionnaires and analyzed using descriptive statistics and multiple regression analysis with SPSS. The findings revealed that tax knowledge had a positive and statistically significant effect on advance tax compliance (β = 0.493, p < 0.05), indicating that improved understanding of tax obligations, payment procedures, and deadlines enhances compliance. Tax enforcement also had a positive and significant effect on advance tax compliance (β = 0.203, p = 0.05), demonstrating that effective enforcement measures, including penalties, monitoring, and audits, promote compliance among PSV owners. The study concludes that both tax knowledge and tax enforcement significantly enhance advance tax compliance among PSV owners. It recommends that the Kenya Revenue Authority, in collaboration with the National Transport and Safety Authority and PSV SACCOs, strengthen taxpayer education programmes, simplify dissemination of tax information, and enhance transparent enforcement through integrated compliance monitoring and consistent application of tax regulations.