Abstract:
:his study sought to analyze tax planning practices and their effects on agricultural based
:i:J3ll and medium enterprises in Nyeri town. The study was guided by the following three
~c objectives; to establish how outsourcing of tax services affects financial performance
of agricultural based small and medium enterprises; to determine whether technology Tax
c!:iven practices affects financial performance of agricultural based small and medium
eaterprises and to investigate the effect of business legislation on financial performance of
zgricultural based small and medium enterprise in Nyeri town. The target population was 94
business owners in Nyeri town and a sample of 76 was selected to participate in the study. A
self-administered semi-structured questionnaire was distributed to business owners where
882% response rate was achieved. Data analysis was conducted using statistical package for
social sciences (SPSS) to generate descriptive and inferential statistics. Frequencies and
percentages were generated from the data and presented using frequency distributions tables
while multiple regression analysis was done to establish relationship of each parameter of the
independent variables in the study. The results indicated that outsourcing of tax services and
technology driven tax practice were found to have a positive and significant effect on
agricultural based SMEs financial performance when considered singly and when combined
with other factors under this study. Form of business legislation had positive and significant
effect on agricultural based SMEs financial performance when considered singly but positive
and insignificant effect when combined with other factors under this study. In addition,
outsourcing of quality tax service, modem tax structure development, ltax training, checking
tax balance online, understanding the prevailing tax laws and regulatory management system
were the parameters of the independent variables found to have positive and significant effect
on agricultural based SMEs financial performance. The study recommends that agricultural
based SMEs should outsource tax services from the consultants who will assist SMEs to
comply with various laws relating to tax. The study further recommends that agricultural
based SMEs should install the necessary lCT infrastructure and make use of ICT in order to
enhance performance. Future research could focus on the challenges agricultural based
SMEs face when undertaking tax planning practices meant to enhance financial performance.
