Tax Planning Practices and Financial Performance of Agricultural Based Small and Medium Enterprises In Nyeri Town

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.