TAX DEFERRAL PROGRAMMES AND FINANCIAL SUSTAINABILITY OF SMALL AND MEDIUM ENTERPRISES IN NAKURU COUNTY, KENYA
TAX DEFERRAL PROGRAMMES AND FINANCIAL SUSTAINABILITY OF SMALL AND MEDIUM ENTERPRISES IN NAKURU COUNTY, KENYA
Grace Njeri Mwangi - Masters of Business Administration, Kenyatta University, Kenya
Dr. Daniel Makori - Kenyatta University, Kenya
ABSTRACT
Small and medium enterprises (SMEs) depend on reliable cash flow to meet operating expenses, purchase inventory, pay employees and remain in business during periods of economic uncertainty. Tax deferral programmes may support these needs by postponing eligible tax payments and temporarily allowing enterprises to retain funds for working capital. This study examines tax deferral programmes and financial sustainability among SMEs in Nakuru County, Kenya. The study used a descriptive research design, structured questionnaires and proportionate stratified sampling. The population of the study was the 154,500 registered Small Medium enterprises in the county of Nakuru, while the sample consisted of 378 SMEs, which was obtained through proportionate stratified random sampling. Primary data collection was carried out using structured questionnaires and analysis was done using descriptive statistics and multiple regression analysis. Descriptive results show a composite tax-deferral mean of 2.2 (standard deviation = 1.0), suggesting relatively modest awareness, familiarity and reported use of the deferral arrangements measured. The study also reports a positive correlation between tax deferral and financial sustainability (r = 0.544, p < 0.01). In the multiple regression model, tax deferral had a positive coefficient (B = 0.457; t = 2.135; p = 0.033), remaining statistically significant at the 5% level after the other tax-incentive measures were included in the model. The findings suggest that payment timing can matter to SME financial sustainability, although a deferral postpones rather than necessarily cancels a tax obligation. The study recommends clearer communication of eligibility and repayment requirements, simpler administrative processes, and further research using objective financial records.
