Socio- Psychological Determinants, Compliance Cost and Value Added Tax Compliance
DOI:
https://doi.org/10.53819/81018102t2438Abstract
Purpose: We tested the moderating effect of compliance cost on the relationship between socio-psychological determinants and Value Added Tax compliance among commercial building owners in Kenya.
Design/Methodology/Approach: We employed hierarchical regression model to test the hypotheses using a cross-sectional survey data drawn from 255 registered commercial building owners in Kenya.
Findings: The empirical findings indicate that taxpayer knowledge, religiosity and patriotism significantly and positively influence tax compliance while the effect of egoism is negative. In addition, when the compliance cost is high, the effect of taxpayer knowledge, religiosity and patriotism on VAT tax compliance weakens, whereas the influence of taxpayer egoism on VAT compliance is stronger.
Research Implications: Overall, the analyses suggest that the when taxpayers are knowledgeable, religious and patriotic they are more likely to be VAT compliant as opposed to when they egoistic. Further, compliance cost is a crucial catalyst that ought to be considered when assessing for tax compliance among taxpayers.
Originality/value: This work highlights the value of the taxpayers attributes in pursuit of VAT compliance. Significantly, the study reveals that taxpayer’s knowledge, religiosity and patriotism can enhance VAT compliance while egoism does not. However, their effect is contingent on compliance cost. This contributes to the socio-psychological determinants-tax compliance literature by clarifying how specific taxpayer attributes influence VAT compliance under different levels of compliance cost.
Keywords: Taxpayer Knowledge, Religiosity, Patriotism, Egoism, Compliance Cost, VAT compliance
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