Tax Knowledge Base

Permanent URI for this community

http://10.150.1.119/handle/123456789/2358

Browse

Now showing 1 - 20 of 549

The Level of Deepening and Classification of Cryptocurrency Transactions and Taxation in Kenya
(Kenya School of Revenue Administration, 18-08-21) Miriti, Nelly; Nekesa, Marion
This study will seek to determine the level of deepening and classification of cryptocurrency transactions and taxation in Kenya. Cryptocurrencies present a non-tax revenue base for the revenue authority; however, no existing tax laws are guiding the treatment of cryptocurrencies. The main objective of this study will be to find out the effect of classifications of cryptocurrency transactions on the tax laws and regulation in Kenya. The study will employ a qualitative exploratory research design and will use primary data collected from tax consultants within the Kenya Revenue Authority and the big audit firms in Kenya by conducting interviews. The data collected from the interviews has been analyzed by the content analysis method. The study has established that there is a knowledge gap amongst the professionals on the use, accounting, and taxation of cryptocurrency. It is also evident that cryptocurrencies can be classified as intangible assets, inventory, or digital currency rather than money or cash. The circumstances and nature of the transactions affect the taxation of the income generated from cryptocurrency transactions. The study has also established there is need for regulation of cryptocurrencies in the aspects of accounting guidelines, taxation framework and legality of the activities associated with cryptocurrency.
Factors Affecting Rental Income Taxpayer’s Compliance
(Kenya School of Revenue Administration, 18-08-21) Ondoro, Ombogo Boniface
Taxation is the primary source of revenue for governments throughout the world to implement their political, social-economic agendas and to deliver services to the citizens. In Kenya, increased government recurrent expenditure, capital expenditure, and the need to finance both national and county government activities using local sources of funds has called for the government to bring into the tax net sectors that have remained untaxed before. In the finance bill of 2012/2013, a lot of emphasis was put on rental income as a subject of taxation. Previous economic statistics records of KRA and Treasury indicate that less than half of property owners and developers had complied with these tax requirements. This study was carried out to establish how property owners have responded to the property taxation measures, and the factors that influenced their compliance such as perception, human resource, tax education and cost of compliance to rental income tax in Kenya. To achieve this objective, the researcher used both primary and secondary data. Primary data was collected by seeking opinion from a sample of 210 property owners, sampled from the seven KRA regions using telephone interview questionnaires. While secondary data was collected from revenue records of KRA, previous studies carried out by researchers on rental income tax both globally and locally for the purpose of comparison. Data collected was analyzed by using the statistical software program namely Statistical Package for Social science (SPSS) version 20. The quantitative data was analyzed using descriptive statistics (frequency, percentage, mean and standard deviation) and a number of techniques of analysis was used including Reliability test, Correlation and Multiple Regressions. According to the responses of the taxpayer’s rental income tax compliance in Kenya is influenced by: age, current occupation, financial constraints, referent group influence, educational level of taxpayers, awareness of taxpayers, perception of tax fairness, opportunity cost of evading, tax education, government incentives, trust of the tax collector, tax collection procedures and tax audits. Based on the findings of this study the possible recommendation includes: developing taxpayer’s capacity of understanding tax, upholding tax fairness and equity, developing capacity of tax authority, improve taxpayers trust on the authority, government to provide social services to the public to get trust from the society who will in turn reduce tax evasion.
Use of Time Series Models on Forecasting of Value Added Tax Revenue in Kenya Revenue Authority
(Kenya School of Revenue Administration, 18-08-21) Kithure, Muthuri Evans
Taxation is one of the means by which governments finance their expenditure by imposing charges on citizens and corporate entities. Tax revenue forecasting plays a central role in annual budget formulation. It provides policy makers and fiscal planners with the data needed to guide borrowing, use accumulated reserves, or specify monetary measures to balance the budget. Therefore, it is necessary for a government to forecast the revenue it collects for planning purposes. Kenya Revenue Authority (KRA), is an agency of the government of Kenya that is responsible for the assessment, collection and accounting for of all revenues that are due to government, in accordance with the laws of Kenya. The main objective of this study was to fit time series models in the data series of revenue collections and establish their effectiveness as far as revenue forecasting is concerned. The study used the monthly Value Added Tax (VAT) collections data from the financial year 2009/2010 to 2015/2016 with the general objective of exploring patterns in the data such as trend, seasonal components, cycles among others and further establish a suitable forecasting model which can be used to predict the amount of VAT revenue to be collected in a certain specified period. The first step was to check if the series was stationary by using Dickey Fuller Test, thereafter transformation by differencing if the series was not stationary. The order of the models was tentatively chosen by analyzing the ACF and PACF plots of the data. This resulted to AR(3) model, MA(1) model, ARMA(3,1) model and ARIMA(3,1,1) model which were fitted to the data series. In order to select the best potential model, different statistics were used like BIC, AIC, AICc, and forecast accuracy measures like ME, MAE and MPE. ARIMA(3,1,1) was selected as the best model compared to the other models. Diagnostic check was made to test for correlation and normal distribution of the residuals using Box-Ljung test, Q-Q plots and Shapiro wilk test and the results showed normal distribution of the residuals with no correlations for all the models. Using the models, forecast of VAT revenue collection in the financial year 2016/2017 was made and the forecasted values compared with the revenue collections that were made in the respective financial year. ARIMA (3,1,1) produced better forecasted values as compared to the other models. Therefore ARIMA (3,1,1) was chosen as the best effective model to fit the data series and forecast the VAT revenue collections.
Effect of Technological Uptake On Pay as You Earn Tax Performance from Medium Taxpayers in Kenya
(Kenya School of Revenue Administration, 18-08-21) Cheboi, Cynthia Jemutai; Ogaga, Bruce
Every year the Kenyan Government sets targets of the amount of tax it intends to collect. However, it is noted that often times the Kenya Revenue Authority fails to achieve these targets. Hence it necessitates an investigation into ways to improve revenue collection which gives rise to this study. The objective of the study was to investigate the effect of technological uptake on Pay As You Earn tax performance. The specific objectives of the study were to establish the effect of E-registration on Pay As You Earn tax performance, to determine the effect of E-filing on Pay As You Earn tax performance and to establish the effect of E-payment on Pay As You Earn tax performance. The theories that guide this study are: Technological Acceptance Theory and the ability to pay theory. The study adopted the descriptive research design. The population of the study was Medium taxpayers registered under the Medium Taxpayers Office of Kenya Revenue Authority. There were 3,972 medium taxpayers registered under the Medium Taxpayers Office as at 31st December, 2017. A census of the 3,972 medium taxpayers was used. The study used secondary data collected from KRA records and reports. This helped get data on registration uptake, returns filed, the number of transactions completed through the payment gateway and tax collected. Both descriptive statistics and inferential statistics were carried out with the help of the SPSS software. Data was analysed using regression analysis by the use of a linear regression model whereby Pay As You Earn tax performance was the dependent variable and the independent variable was technological uptake. In the first research question, the study found that the e-registration technology enhanced PAYE tax performance significantly, although the effect was weak. On the other hand, the study found that E-filing technology affects PAYE tax performance significantly and the effect was strong, while in the last research objective it was established that e-payment influences PAYE tax performance significantly. Technological uptake has caused a variation of 93.4% (R2=0.934). The study recommends that KRA should scale up the use of technology in all tax streams to enhance tax revenue collection and performance. The study also recommends concerted effort from the KRA management on creating awareness of the tax systems, to consistently and incrementally grow technology, while managing change to enhance uptake. In addition, during the upgrade or change over, KRA should manage the stages seamlessly to ensure that the momentum of the uptake does not stagnate.
Effect of Base Erosion and Profit Shifting On Corporation Tax Performance,
(Kenya School of Revenue Administration, 18-08-21) Kiilu, Joseph Mutunga; Mati, Martin
The Revenue performance against the set target has been a big challenge. To overcome this revenue gap there is need to shift focus and look at the contemporary issues such as Base Erosion and Profit Shifting (BEPS) that affect Corporate Tax performance across the borders and beyond. Against this backdrop the present study sought to establish the effect of Base Erosion and Profit Shifting on Corporation Tax performance with reference to Multinational Enterprises in Kenya. More specifically, the study sought to establish the correlation between Corporation Tax performance and Base Erosion and Profit Shifting; establish extent of Base Erosion and Profit Shifting by Multinational Enterprises in Kenya; determine the factors that influence the Differential Tax Rate in Kenya; and to establish the challenges facing Kenya Revenue Authority on dealing with BEPS. Descriptive research design was used in the study. The population of interest consisted of staff members working in the Kenya Revenue Authority in Nairobi, mainly Large Taxpayer Office and Medium Taxpayer Office. The population was divided into strata based on the industry and the recommended sample size shall be 42 respondents thus the whole population was used to give the intended data. The main technique applied by the study was of the questionnaires which was issued to the respondents and given enough time to answer the questionnaires. Open ended and close-ended questions were used during the exercise.
Impact of Covid-19 Pandemic on Kenyan Tax Revenue
(Kenya School of Revenue Administration, 18-08-21) Ng’etich, Vincent; Kilonzo, Wilson Mwasya; Oure, Silas Okeyo; Njagi, Faith Muthanje; Kabiru, Agnes Wanjiru
The first case of Coronavirus-19 was detected in the Wuhan city in China in December 2019. The virus first spread across the world leading to the declaration by the World Health Organization (WHO) of the disease as a Public Health Emergency of international concern on 30th January 2020, and as a pandemic on 11th March 2020. In response to the pandemic, the governments instituted various measures to either contain the spread of the virus or ameliorate its effect on the citizenry. The government of Kenya put in place three different measures to in response: fiscal policy measures, monetary measures and containment measures. Various institutions within the government including the Kenya Revenue Authority (KRA) also put in place additional measures to ensure continued service delivery. This study has investigated the effects of fiscal policy measures, containment measures and KRA’s approaches to tax collection on tax revenue. The theories that underpin this study are demand and supply theory, technology acceptance theory (tam model) and Keynesian theory. The study employed a descriptive cross-sectional study design, which employs mixed methods. The study population were business entities. A questionnaire comprising of closed and open-ended questions was developed and administered to the respondents. Generally, the study found that the fiscal measures although had positive effect on the taxpayers, they had a negative effect on tax revenue. The containment measures had negative effect on the business entities and by extension tax revenue. With respect to the KRA’s approaches to tax collection during Covid- 19, they had mixed results. Recommendation have also been given including need for further research in the area
Enforcement of the Digital Economy Taxation
(Kenya School of Revenue Administration, 18-08-21) Kapkai, Philip; Muthee, Irene; Ngala, Bonaventure; Musa, Nuh; Wanyeri, Ann; Gathoni, Evelyn
Kenya has seen tremendous growth in the use of technology with internet penetration at 89.5% of the population as at December 2019. Intense reliance on technology has been noted hence causing a huge transformation in the business environment. Finance Act 2019 (the “FA 2019”) amended the Income Tax Act to provide for taxation of income accruing through the digital market place. Taxation of digital economy has imposed new enforcement challenges to tax policymakers, tax authorities and governments. The challenges are attributed to complex nature of transactions carried out in the digital economy. The study identified several gaps such as difficulty in determining transactional value on income accrued or received in Kenya as harboured by jurisdiction issues in which value creation occurred. The gap will be addressed by review and amendment of Kenya’s double tax treaties, KRA and Communication Authority of Kenya to liaise in mapping of IP addresses to help in tracking transactions. Additionally, it is important to frame the DST around various revenue streams. Further, the research proposed raft of changes in the DST Act to minimise the potential for tax evasion and avoidance. Considering the legal perspective, the current Kenyan concept of permanent establishment especially regarding digital tax, does not establish a taxable presence. This is because it is mainly based on an entity as being physically present or having a physical representative in the country. Therefore, it will be necessary to come up with parameters defining what amounts to a digital permanent establishment (PE) or circumstances that will trigger a digital PE in Kenya. Without a nexus, KRA runs the risk of countless disputes.
Digital Taxation in Tackling Illicit Financial Flow in Developing Countries
(Kenya School of Revenue Administration, 19-04-22) Ngunjiri, Ndirangu
Illicit financial flows not limited to crime, corruption, and tax evasion are an increasing concern all over the world. Among the targets in Sustainable Development Goals (SDGs) is stemming the flow of illicit funds. However, there exists no consensus on the accurate definition of illicit financial flows or how to measure them. Some argue for the definition to cover illegal behavior such as tax fraud and evasion as well as legal behavior that reduces tax revenue. To curb illicit financial flows, the use of digital technologies has emerged as one of the preferred methods among other ways such as closing loopholes in tax treaties. This will help countries mobilize funds for efforts including poverty reduction. This project aims to establish how digital taxation has helped countries curb the flow of illicit finance. The existence of vulnerable financial systems contributes to reduced tax revenue leading to constrained social and economic development. Collaboration among the various arms of government is among the research's policy recommendations. The policies should aim at strengthening institutions to enhance rule of law, meeting contractual obligations, and property rights protections in the jurisdictions. The countries should actively seek to strengthen international financial and technical cooperation to combat illicit financial flows (IFFs).
How long is a long run? Tax Revenue Forecasting
(Kenya School of Revenue Administration, 19-04-22) Albimana, Masoud Mohammed; Hemedb, Issa Moh’d
This paper intends to examine whether using long run sample size has more forecasting power than short run sample size. The sample size ranges from 1996 to 2016 and 2000 to 2015. Ordinary Least Square (OLS) method was used to forecast three components of tax revenues including total revenue (TR), Pay As You Earn (PAYE) and Value-added Tax (VAT). The results show that, both TR and PAYE forecasts are slightly better when using short run sample size. However, for VAT, forecasting power is slightly better when using long run sample period. This reveals that, in contrast to other fields, forecasting tax revenue using the short run sample size data could be more useful. We believe that, the long run period is subjective and field oriented. Also, the nature of the tax can have different implications in selection of sample size and data frequency.
The Determinants of Tax Revenues among EAC members
(Kenya School of Revenue Administration, 19-04-22) Albimana, Masoud Mohammed; Moh’d Hemedb, Issa Moh'd
A tax revenue mobilization in less developing countries is an empirical debate and has received a lot of attention. Reflecting this, increasing tax to GDP ratio is a policy option that needs special attention in developing countries, especially the lower income economies. Meanwhile, this study intends to examine the determinants of Tax revenue to GDP ratio among four East African Community Countries (EAC-4). Analysis is conducted using Fixed and Panel data approach using most recent data from 2010-2020.The sample countries are four (4) East African Community (EAC) members. The results suggest that, economic growth has significantly positive contribution to tax revenues while growth of the agricultural sector retards tax revenue collections. The impact of manufacturing sector and service sector on tax revenue is insignificant. To improve tax revenue performance, an improvement and implementation of the designed tax policy is needed in these countries to properly tap growth of all economic sectors
Effect of Technology Usage and Capital Gains Tax Performance Among Landlords in West of Nairobi Kenya
(Kenya School of Revenue Administration, 19-04-22) Omwenga, Emmah; Ogaga, Bruce
Capital Gains Tax is charged on the appreciation of capital assets and is commonly imposed only when the increase in value is realized through sale or exchange. The study aimed to determine how technology utilization affects the performance of Capital Gains Tax (CGT) in Kenya with specific focus in the West of Nairobi. The key source of CGT is mainly sale of movable and immovable properties; stocks, land and buildings respectively. Transfer of shares in the stock exchange is another source but not stocks and as ubiquitous in Africa as the later. The study was anchored on the theory of Technology Determinism. Descriptive research design was adopted in the study. The Target population was 8,800 land lords located in West of Nairobi. A simple random sampling method was adopted to arrive at a sample size 64 respondents. The study used primary data collected from the respondents, while secondary data was collected from existing literature on revenue reports and journals. Inferential statistics was analyzed through correlation analysis and regression analysis. The findings reveal that automation has significant positive correlation with CGT performance. The regression model further predicts that holding other factors constant, adequate use of technology increases the performance by 31.5%. The study thus recommends full adoption of systems automation, culminating in block chain management in order to optimize CGT and other property tax performance.
Using Tax Incentives to Compete for Foreign Investment
(World Bank, Washington, DC, 2001) Wells, Louis T., Jr.; Allen, Nancy J.; Morisset, Jacques; Pirnia, Neda
The book contains complementary essays on the use of tax incentives, to attract foreign direct investment (FDI). The first essay presents results of the authors' original research, and explores FDI, and issues of tax incentives, in the context of Indonesia. Their results mostly support the arguments made against incentives, particularly they find little evidence that when Indonesia eliminated tax incentives, there was any decline in the rate of FDI into the country. Similarly, the second essay surveys the research of others on the same topic, and pertaining to the same issues discussed in the first essay. They show that results of other researchers, are generally consistent with the findings of the research in Indonesia, notably that tax incentives, neither affect significantly the amount of direct investment that takes place, nor usually determine the location to which investment is drawn. Nevertheless, recent evidence has shown that when factors such as political, and economic stability, infrastructure, and transport costs are more, or less equal between potential locations, taxes may exert a significant impact. This is evidenced by the growing tax competition in regional groupings (i.e., the European Union) or, at the sub-regional level within one country (i.e., the United States). Both essays provide a basis for much more sophisticated analysis by policymakers than previously, and, both are important because they question governments' institutional arrangements that create agency problems with respect to tax incentive policies.
Uganda's Recovery
(World Bank, Washington, DC, 2001-03) Reinikka, Ritva; Collier, Paul
This book consists of series of studies written by a range of specialists who analyze the responses of private sector agents--households, farms, and firms--and of the government of Uganda itself, to the macroeconomic and structural reforms implemented since the late 1980s in a society recovering from a traumatic civil conflict. The importance of this line of inquiry cannot be underestimated because the success or failure of market-oriented reforms depends crucially on just how private sector agents are able to respond to incentives and opportunities created by the reforms. The analysis in this book draws on quantitative data derived from a series of household surveys and from surveys of firms conducted in the 1990s and more recently in 1999/2000. The household surveys permit analysis of the evolution of income, expenditures, and poverty during this period. The impact of reforms on rural factor markets, on crop and livestock production decisions, and on firms' investment decisions are also among the issues researched in this report. While this report praises Uganda's achievements where warranted, it provides an objective assessment of the reforms and does not shy away from identifying areas where policy mistakes were made. It points out where major weaknesses still exist, notably, public sector corruption, the still poor enforcement of contracts, and the deficiencies in the physical infrastructure.
Customs Modernization Initiatives
(World Bank, Washington, DC, 2004) De Wulf, Luc; Sokol, José B.
This volume presents case studies of customs modernization initiatives in eight developing countries: Bolivia, Ghana, Morocco, Mozambique, Peru, the Philippines, Turkey, and Uganda. The purpose of these case studies was to obtain a firsthand view of how these countries undertook customs reforms and to assess their success. The overall lessons learned from these studies are presented in chapter 2 of the Customs Modernization Handbook (World Bank forthcoming), a companion volume that provides policymakers, practitioners, and project managers from development agencies with an overview of the key issues they need to address in preparing and implementing customs modernization initiatives. The audience for the Customs Modernization Handbook is customs officials who are called on to design and implement customs reform and modernization strategies, as well as staff members of the World Bank and of other multilateral and bilateral development agencies who support developing countries in implementing such strategies. All the case studies except for the one on Ghana were prepared using basically the same methodology, which aimed at identifying the origins of the reforms, the main drivers, and the outcomes. The Ghana case study is somewhat different, because it focuses on how the automation of trade and customs processes took the lead in the trade facilitation and customs reform.
Gender and Economic Growth in Uganda
(World Bank, Washington, DC, 2005) Ellis, Amanda; Manuel, Claire; Blackden, C. Mark
Uganda is a leader in Sub-Saharan Africa, in recognizing linkages between economic growth and gender issues. These linkages are critical for achieving the Millennium Development Goals. The study assesses the legal and administrative barriers faced by women, as identified by the Bank's Foreign Investment Advisory Service (FIAS) and the International Finance Corporation's (IFC) Gender-Entrepreneurship-Markets Unit. The structure of the report mirrors that of the FIAS 2003 Administrative Barriers to Investment Report, and is designed to highlight the gender dimensions of that research to encourage further replication. The findings of this report indicate the considerable potential for economic growth that exists, if Uganda is to unleash the power of women, and support their full economic participation in the private sector. This assessment considers the relationship between gender and economic growth in Uganda in the context of promoting women's participation in business and entrepreneurship. Men and women both play substantial, albeit different, economic roles in the Ugandan economy. Each contributes about 50 percent of GDP, and women represent 39 percent of businesses with registered premises.
Private Solutions for Infrastructure in Rwanda
(World Bank, Washington, DC, 2005) Private-Public Infrastructure Advisory Facility
This report aims to provide an objective assessment of the condition of Rwanda's infrastructure sectors and of the institutional and policy frameworks that are associated with them. It also provides a clear route map for infrastructure sector reform, as well as highlighting both the opportunities that exist for the private sector and the role that the donor community can play in assisting the Government with establishing priorities in infrastructure.
Leadership, Policy Making, Quality of Economic Policies, and Their Inclusiveness
(World Bank, Washington, DC, 2008) Thomas, Rusuhuzwa Kigabo
This paper analyzes the role of the leadership in the economic growth in Rwanda, a country that was seriously affected by civil war and the 1994 genocide. It appears that the will and the clear vision of the leadership in Rwanda were one of the central pillars of the very good economic and social performances in Rwanda. This is particularly important because the country has almost no natural resources and the economy and its fundamentals were completely destroyed by the 1994 genocide. This paper thus helps enrich the various economic growth models by stressing the importance of the quality of leadership.
Budgeting for Effectiveness in Rwanda
(World Bank, Washington, DC, 2010-10-01) World Bank
The overall objective of this comprehensive report is to consider Rwanda's budget support in the context of its overall public expenditure and resources to: (a) provide an overview of Rwanda's experience with budget support, reform measures, and its progress of budget harmonization, (b) provide the first comprehensive assessment of all of Rwanda's overall public expenditures and resources between 2004 and 2007, and (c) provide the first summary of public expenditure reviews and related analytical work undertaken in priority sectors, covering varying periods between 2000 and 2007. Following this introductory chapter, chapter two reviews: (a) general budget support relevance, rationale, and outstanding challenges in the context of Rwanda by providing a historical background of budget support; (b) Rwanda's progress in budget support- related processes and practices; (c) economic and structural reforms to date; and (d) budget support predictability trends. Chapter three then assesses the net resources available to the government of Rwanda and how these resources were spent. In this chapter, resources are broken down by domestic revenue (tax revenue, nontax revenue, and other sources), external funding (grants and loans), and other financial resources; expenses are broken down by recurrent expenditures (operational expenditures, interest and commission, reimbursement of public debt, and subsidies and recurrent transfers), capital expenditures and net lending, and arrears. Chapter four follows with a detailed review of resource allocations and spending among the government's ministries, including its transfers to districts. Public expenditures are broken down according to the structure of the Organic Budget Law, considering recurrent and development spending by ministry and economic classifications. Chapter five reviews all sectors-not only ministerial expenditures, but also other sector?related spending across ministries and other expenditures that contribute to a sector but are not part of central?government spending. Chapter six summarizes the report, addresses outstanding challenges, and offers concluding remarks.
Entrepreneurship Education and Training
(Washington, DC: World Bank, 2014-06-17) Robb, Alicia; Valerio, Alexandria; Parton, Brent
This report summarizes the key themes and findings from three in-depth case studies of EET programs in Ghana, Kenya, and Mozambique. Each case study produced rich information on the programs context, the landscape of programs in each country, and the qualitative insights from local EET stakeholders. This report synthesizes information from across the case studies to analyze the extent to which these countries programs are meeting the needs of local entrepreneurs. It also introduces findings from global EET research to show how programs in the case-study countries relate to what is known about global practice in EET. From this synthesis, the report presents a set of key findings intended to illuminate how EET programs can be better aligned with local needs and promising EET practices globally.
Muhugu Limited -v- Commissioner of Domestic Taxes
(Kenya Law, 2015) Kenya Law: Tax Appeal Tribunal

Browse

Browsing Tax Knowledge Base by Issue Date

Results Per Page

Sort Options