The Effect of Peer Influence on Turnover Tax Compliance among Small and Medium Enterprises in Meru County, Kenya

Purpose: Turnover tax was introduced in Kenya in 2007 to enhance revenue collection, improve tax administration and reduce non-compliance and collection costs among the micro, small and medium enterprises. The main objective of the study was to determine the effect of peer influence on turnover tax compliance among small and medium enterprises in Meru County, Kenya. The study was guided by theory of planned behaviour. Methodology: The study adopted an explanatory research design to enable the generalization of the study hypotheses. The target population was 1756 small and medium enterprises in Meru town and a sample size of 325 respondents. The study showed that the response rate for the questionnaire was 72.0%, showing that 234 out of 325 participants correctly filled the and submitted their questionnaires. The study used primary data, collected through questionnaires which was administered through drop and pick later method. Results: The study found that peer influence had a positive and significant effect on turnover tax compliance (β = 0.237, p = 0.000). Conclusion: Based on the findings, the study recommends that the government enhance programs that foster peer influence, as it has been shown to positively affect tax compliance. Future studies could also investigate the effects of KRA m-service on turnover tax compliance