Factors influencing Value Added Tax compliance among small and medium enterprises in Kangemi area, Nairobi county, Kenya.
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Date
2022
Authors
Masau, Catherine
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT
Abstract
Tax compliance is important as it has a direct impact on revenue for most governments
around the world. Despite the reforms that the Kenya Revenue Authority has been
undertaking so as to increase revenue collection, it has of late failed to meet its revenue
targets particularly VAT targets. This shows that there is a problem with VAT compliance in
Kenya and this challenge forms the main motivation for undertaking this study. In realization
of this situation, this study aimed at assessing the factors influencing value added tax
compliance among small and medium enterprises in Kangemi area, Nairobi County, Kenya.
The study had three specific objectives namely: To determine the effect of taxpayer
education, systems reliability and compliance cost on value added tax compliance among
small and medium enterprises in Kangemi area. This study was guided by four theories:
Economic deterrence theory of tax compliance, Transaction cost economics theory, The
ability to pay theory and Theory of technology acceptance. The study used descriptive
research design and the population of this study was 120 and a sample size of 91 small and
medium enterprises in Kangemi area that are registered for VAT compliance. The study used
primary data. Findings indicated that taxpaer education was significant on VAT compliance
with(0.000 ρ < 0.05),systems reliability was significant on VAT compliance with(0.005 ρ <
0.05) and compliance cost was significant on VAT compliance with (0.007; ρ < 0.05). The
study concluded that taxpayer education, systems reliability and compliance cost affect VAT
compliance. Based on the findings the study recommends on systems reliability that the KRA
should enhance systems availability to encourage tax payers to be more compliant. Therefore,
further research should focus on other variables such as effect of deterrent measures on Value
Added Tax performance
Description
Post graduate Diploma in Tax
Keywords
Tax compliance, value Added Tax,