The Impact of Spiritual Accounting on Value Added Tax Compliance in Nigeria

Abstract

This study explores the impact of spiritual accounting on Value Added Tax (VAT) compliance among small and medium-sized enterprises (SMEs) and informal sector operators in Nigeria. VAT remains a critical source of government revenue, yet compliance levels are persistently low due to evasion, weak enforcement, and limited tax morale. Spiritual accounting, which integrates ethical, moral, and religious values into financial reporting, offers a potential solution by reframing VAT obligations as both legal and moral duties. Using survey data from 200 respondents, the study employed descriptive statistics, correlation analysis, regression, and ANOVA to test six hypotheses. Results indicate that spiritual accounting practices, ethical values, religiosity, and transparency significantly predict VAT compliance, with the regression model explaining 31% of the variance in VAT compliance. Findings confirm that moral responsibility and religious convictions discourage evasion, while transparency fosters trust between businesses and tax authorities. Challenges such as a lack of standardized frameworks and resistance from profit-driven enterprises were noted. The study concludes that integrating spiritual accounting into tax education and compliance strategies can strengthen VAT collection, improve accountability, and enhance fiscal sustainability in Nigeria.