Effect of Peer Influence on Value Added Tax Compliance Among Manufacturing Firms in Embakasi North, Nairobi, Kenya
DOI:
https://doi.org/10.70619/vol6iss2pp18-28-768Keywords:
Peer Influence, Value Added Tax Compliance, Manufacturing Firms, Embakasi NorthAbstract
Value-Added Tax (VAT) compliance and digitalization is significant, as digital tools and technologies play a crucial role in improving tax compliance, reducing errors, and enhancing efficiency in tax collection. Value Added Tax (VAT) compliance is a critical aspect of revenue collection for governments worldwide. However, it has encountered various challenges, the most prevalent being verifying input tax claimed by taxpayers when filing VAT returns. The study's general objective was to determine the effect of peer influence on value-added tax compliance among manufacturing firms in Embakasi North, Nairobi, Kenya. The study was guided by the Theory of Planned Behaviour. The research design was explanatory, with a target population of 426 manufacturing firms in Embakasi North, Nairobi, Kenya, and a sample of 206 respondents. Out of the 206 questionnaires issued, 196 were completed and submitted on time, resulting in a 95.1% response rate. The data was collected through a structured questionnaire. The research data were analyzed using descriptive statistics, measures of central tendency, and inferential statistics, including linear regression analysis. The study found that peer influence affects value-added tax compliance (β = 0.186, p = 0.000). Based on the findings, the study recommends that the government should foster peer influence by creating official digital forums or recognizing compliant firms, thereby harnessing social norms to encourage wider compliance. Future research should investigate the impact of tax audit on Value Added Tax Compliance.
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