The objective of this study was to establish the influence of cost of tax compliance on tax compliance among the Export Processing Zones investors in Kenya. This research used a cross sectional survey research design. The study population comprised of 152 duly registered and licensed firms by the Export Processing Zones Authority.  Since all the registered investors in the three Kenyan Cities were considered for the study, a census sampling technique was employed. Primary data was gathered using structured questionnaires and captured through a 5-point type Likert Scale questionnaire. Statistical Package for Social Sciences (SPSS) was used in the analysis of data. Data was analyzed by use of descriptive and inferential statistics. Analysis of Variance (ANOVA), multiple regression and correlation analysis was carried out to test the hypothesis. The study findings indicated that the cost of tax compliance influenced tax compliance to a great extent with a mean score of 4.02. This implies that tax compliance cost is a key determinant of tax compliance. Tax compliance costs play a key role in determining the level of a firm’s tax compliance. These costs include both direct and indirect costs such as auditing costs, costs of hiring tax personnel, agents & experts, time taken to complete tax assessment & returns filing as well as the accessing, employing and retaining knowledgeable staff; all for purposes of tax compliance. The study concludes that the cost of tax compliance is statistically significant in explaining tax compliance. The findings imply that taxpayers will comply more when tax compliance costs are lower and tax systems adequately simplified. The study recommends that governments and revenue authorities need to actively engage business enterprises through regular sensitizations on proper record keeping. Proper record keeping will facilitate; simplified tax preparations, returns filing, advance knowledge on tax laws and regulations as well as tax payments. Sensitization on basic tax calculation procedures is also key in the reduction of indirect costs associated with tax compliance.


Key Words: Tax compliance, Cost of Tax Compliance, Export Processing Zones.