ROLE OF ELECTRONIC TAX INVOICE MANAGEMENT SYSTEMS IN ENHANCING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN NAIROBI CITY COUNT, KENYA
DOI:
https://doi.org/10.68715/x8k9jz09Keywords:
Tax compliance, Electronic tax invoice management system, Electronic tax register, , Enterprise resource planning integration, Point of sale integration, Electronic tax return filingAbstract
Purpose of Study : This study examined the role of electronic tax invoice management systems in enhancing tax compliance among small and medium enterprises in Nairobi City County, Kenya. Specifically, it assessed the effects of electronic tax registers, enterprise resource planning integration, point-of-sale integration, and electronic tax return filing on tax compliance among SMEs.
Methodology: The study adopted a descriptive research design targeting 33,701 registered SMEs in Nairobi Central Business District. A sample of 394 respondents was selected through stratified and simple random sampling techniques. Primary data were collected using semi-structured questionnaires and analyzed using descriptive statistics, correlation analysis, and multiple regression analysis in SPSS.
Findings: The findings revealed that electronic tax invoice management systems positively and significantly influenced tax compliance among SMEs. Electronic tax registers (β=0.286, p<0.001), enterprise resource planning integration (β=0.241, p=0.001), point-of-sale integration (β=0.318, p<0.001), and electronic tax return filing (β=0.297, p<0.001) demonstrated significant positive effects on tax compliance. Point-of-sale integration exhibited the strongest influence, followed by electronic tax return filing, electronic tax registers, and enterprise resource planning integration. The regression model explained 64.2% of variations in tax compliance (R²=0.642), demonstrating the substantial contribution of electronic tax systems towards improving reporting accuracy, transaction transparency, operational efficiency, and compliance with statutory tax obligations among SMEs.
Conclusion: The study concluded that electronic tax invoice management systems significantly enhance tax compliance among SMEs. It recommends that the Kenya Revenue Authority strengthen system implementation, promote digital integration, improve technical support, and expand taxpayer education. These measures can enhance reporting accuracy, minimize compliance challenges, and promote sustainable tax administration practices.
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