Effect of Taxpayer Patriotism on Value Added Tax Compliance Among Small and Medium Enterprises in Kisii Town, Kenya

Abstract

Tax compliance, particularly Value Added Tax (VAT) compliance, has been a matter of key concern for both researchers as well as tax administrators, with observed dismal VAT revenue compliance despite improved overall compliance. This study, therefore, aimed to determine the effect of taxpayer patriotism on value-added tax compliance among small and medium enterprises in Kisii town, Kenya. The theories supporting the study were: the Ability to Pay Theory and the Theory of Planned Behavior. This study adopted an explanatory research design with a target population of 3044 small and medium enterprises in Kisii town, with a sample size of 353 respondents. After data collection and verification, 279 completed questionnaires were received, yielding a strong response rate of 79%. The study used questionnaires to collect primary data. The data collected was analyzed using both descriptive and inferential statistics. The study found that taxpayer patriotism had a significant positive effect on value-added tax compliance (β = 0.163, p = .031). The findings suggest policy recommendations regarding the positive effect of taxpayer patriotism on value-added tax compliance. Policymakers should develop national awareness campaigns that link tax payment to nation-building and showcase tangible public benefits from tax revenues. Future studies should examine how specific government accountability measures affect value-added tax compliance.