Factors affecting Value Added Tax compliance among manufacturing firms in Meru County.
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Date
2022
Authors
Munyao, Damaris
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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 tax compliance it has of late failed to meet its revenue targets particularly Value
Added Tax targets. This shows that there is a problem with Value Added Tax compliance in
Kenya and this challenge forms the main motivation for undertaking this study. The general
objective was to establish factors affecting value added tax compliance among manufacturing
firms in Meru County, Kenya. while the specific objectives were to establish the tax awareness
on Value Added Tax compliance in among manufacturing firms in Meru County, to determine
the effect of cost of compliance on VAT compliance among manufacturing firms in Meru
County and to establish the Value Added Tax audit on VAT compliance among manufacturing
firms in Meru County The study was guided by The Fiscal Exchange, economic deterrence
theory and transaction cost theories. The target population was 63 manufacturers in Meru town.
The study will adopt the descriptive research design and census survey in data collection. This
study will use primary data Primary data will be collected using structured questionnaires with
closed questions Data was analyzed descriptive statistics and inferential statistics and presented
on tables and charts. The finding of the study revealed that tax awareness, cost of VAT, VAT
Audit affects VAT compliance among manufacturing firms in Meru County and the study was
statistically significant with the evidence of p value was less than 0.05, ρ=0.002, 0.001 & 0.000
.In conclusion tax awareness, cost of VAT, VAT Audit had positive significant effect on VAT
Compliance from manufacturing firms in Meru County. The study recommends that Kenya
Revenue Authority management should make taxpayers aware that value added tax is
computed, filed and tax due is paid on or before the 20th of every month succeeding the month
in which sales are made. Therefore, it is suggested that more studies can be conducted using
other variables such as the effect of environmental factors on VAT compliance among
manufacturing firms in Nairobi County Kenya
Description
post graduate diploma in tax administration
Keywords
Tax compliance, Value added Tax