Moderating Effect of Tax Sensitization on the Relationship Between Perception of Electronic Tax System and Value Added Tax Compliance Among Small and Medium Enterprises in Kapsabet Municipality, Kenya
DOI:
https://doi.org/10.70619/vol5iss10pp60-72-685Keywords:
Perception of Electronic Tax System, Value Added Tax Compliance, Small and Medium EnterpriseAbstract
Tax is a source of government revenue in nearly all countries in the world because it makes sure that the government is able to provide goods and services to the citizens. Thus, compliance with tax is essential in any economy, and they are aware of the contribution of the revenue collected through tax in developing the country. This research was based on the Moderating Effect of Tax Sensitization on the Relationship between the perception of the electronic tax system and value-added Tax Compliance among SMEs in Kapsabet municipality, Nandi County, Kenya. Two theories used in the study include the Fiscal Psychology theory and the Theory of Planned Behavior. The study employed an explanatory research design. In a population of 846 Small and Medium enterprises, a sample of 272 respondents, who were based in Kapsabet municipality, was used as the target population. Following data collection and preparation, the 223 filled questionnaires were received, which led to a high response rate of 82 percent and a low response rate of 18 percent, which means that 49 respondents failed to respond to the questionnaire. The 5-point Likert scale questionnaires were used to collect primary data. Data was analyzed using descriptive and inferential statistics. It revealed that Tax Sensitization positively moderated the Relationship between perception of electronic tax system and Value Added Tax Compliance (= 0.181, p = 0.000). Based on the findings, the study recommends that the Kenyan government should prioritize investment in digital tax infrastructure and promote its benefits through national campaigns. Policymakers should allocate resources to enhance the reliability, user-friendliness, and accessibility of the electronic tax system. Further studies in this field should focus on the role of tax incentives like accelerated depreciation, deductions on investments, or special rates on small businesses. This is capable of giving information on the impact of fiscal policies on the compliance with VAT.
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