Effect of tax invoice management system on value added tax compliance among Small and Medium Enterprises in Eldoret Town, Kenya

Abstract

Purpose: Tax is an important stream of revenue for government’s development projects and therefore all efforts must be made by governments to ensure that it is accurately and efficiently collected so as to facilitate the government’s operations. The objective of the study was to investigate the effect of tax invoice management system on Value Added Tax compliance among small and medium enterprises in Eldoret town, Kenya. The study was guided by Diffusion of Innovation (DOI) Theory.

Methodology: The research design for this study was explanatory. The population of this study will be 3872 SMEs in Eldoret town and sample size of 362 SMEs who are SME owners/Managers. Questionnaire was used to collect primary data and analysis will include both descriptive and inferential statistics.

Results: The study found that Tax invoice management system and value Added Tax compliance is positive and statistically significant β=0.483.

Conclusion: In conclusion the study revealed that there was a significant relationship between Tax invoice management system and Value Added Tax compliance among small and medium enterprises in Eldoret town, Kenya. The study recommends that that KRA should formulate policies to enhance and actively promote the adoption of Tax invoice management systems among SMEs.