1. Masters in Tax & Customs Administration

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Corporate Governance Practices and Tax Disclosure among Firms Listed at the Nairobi Securities Exchange, Kenya
(Unpublished Research Project, 2019) Kigo, Caroline Wambui
Contribution of Tax Incentives on Revenue Performance among Special Economic Zones Enterprises in Kenya
(KeSRA/Moi Unpublished Research Project, 2019-11) Korir, Goeffrey
Effects of Firm Specific Factors on Performance of Employment Tax Revenue in the Construction Industry in Kenya
(Unpublished Research Project, 2019-11) Wanyoike, Mercy Wangui
Determinants of Tax Compliance in Medium Sized Enterprise in the Manufacturing Sector in Industrial Area, Nairobi, Kenya
(KeSRA/Moi Unpublished Research Project, 2019-11) Kamweru, Nicholas Munjogu
Contribution of Excise Duty Reforms to Excise Duty Compliance by Kenya Revenue Authority
(KeSRA/Moi Unpublished Research Project, 2019-11) Nzioka, Peter Maingi
Effect of tax incentives on foreign direct investment in the oil and gas sector in Kenya
(Kenya School of Revenue Administration_Moi University, 2020) Kanyanjua, Martha Wangui
Over the years, foreign direct investment inflows to Kenya have not been consistent with certain cycles of low inflows. This has been attributed to deterioration in economic efficiency, as well as increasing problems with poor infrastructure and high costs of living. Previous surveys have also described the lack of well-structured and attractive tax incentives as a major barrier to the growth of FDI. The purpose of this study was to assess the effect of tax incentives on foreign direct investment in the oil and gas sector in Kenya. The specific objectives included: to determine the effect of capital deductions, income tax, VAT incentives and import duty incentives on foreign direct investment in the oil and gas sector in Kenya. The research was informed by the theory of innovation diffusion, social exchange theory and stakeholders’ theory. Explanatory research design was used in the study. The target population included five oil and gas companies. The target respondents were 136 senior managers from five oil and gas companies in Kenya. A census of all the managers was done. Primary data was collected using structured questionnaires. The study applied quantitative methods to analyze data. These included descriptive statistics (percentages, means and frequencies). Further, inferential statistics (Pearson’s correlation and regression) were conducted to determine the relationship between tax incentives and foreign direct investment. The findings indicated that capital deductions (β1=0.377, P = .000); income tax (β2= 0.286, P = .000); VAT incentives (β3= 0.124, P = .020); and import duty incentives (β4= 0.375, P = .000) had a positive and significant effect on foreign direct investment. The adjusted R2 of the regression model was 0.789. The study concluded that tax incentives contribute significantly towards foreign direct investment in the oil and gas sector. Based on the findings, the study recommended that the government should strengthen aspects related to tax incentives. These include; wear and tear allowances, investment allowances, industrial deductions, loss carry-forward, withholding tax incentives, tax credit incentives, allowable deductions, exemption of goods and services from VAT, import duty incentives on machinery, raw materials, office equipment and customs duty. This study focused on the oil and gas sector in Kenya. Further studies could be conducted in other sectors for comparison purposes.
Impact of Indirect Tax Policy Reforms on Revenue Performance in Kenya
(KESRA/Moi University, 2020) Kiara, Faith Gatwiri; Saina, Dr. Ernest; Nekesa, Dr. Marion
The largest source of government revenue in Kenya is taxation. Domestic revenue mobilization is a key priority for providing governments with funds to deliver public services, for sustainable development agendas and investing in development. Tax and non-tax revenue are critical components of domestic resource mobilization. Over the years, there have been major changes in tax systems of various countries including Kenya. The motivation for these reforms has varied from country to country. For many developing countries, the impending fiscal crisis has provided the need for immediate tax reforms to enhance revenues. Kenya has undertaken massive tax reforms since the late 1980s under the Tax Modernization Programme. The significance of Indirect taxes over direct taxes as a means of raising government revenue, has gained momentum and is viewed as more favorable for investment and growth. Little is known about the performance of the reforms in terms of its revenue raising capacity for each tax category. This study aims to examine the impact of tax reforms in respect to pre- and post- reform periods and the factors underlying the observed trends of indirect taxes as one of the revenue sources that is not fully utilized. The objectives of the study were to establish the effects of introduction of Withholding VAT agents, Introduction of EGMS and switching the tax system from hybrid to a uniform specific or ad valorem Excise tax regime on revenue collection in Kenya. Annual secondary data spanning the period 2010-2019 was used in the analysis. The source of the data was mainly Kenya Revenue Authority and Kenya National Bureau of Statistics. Impact evaluation techniques (regression discontinuity and difference-in-difference) also known as quasi panel analysis techniques were used in the analysis. Stata software was employed in the analysis. From the difference-in-difference model, the analysis reveals that the introduction of EGMS led to an increase in excise revenue by 81.2%. This was significant at 1% level of significance. VAT increased by 13.4 per cent following the introduction of VAT withholding agents. This was equally significant at 5% level of significance. These findings are expected to shape policy direction that is aimed at enhancing domestic revenue mobilization. Based on the findings, the study recommends that the Commissioner of Domestic taxes should map all Medium Taxpayers (MTO) based on risk assessment and enroll additional taxpayers who can serve as potential VAT withholding agents. Further, the study recommends the broadening of the scope of goods covered under the EGMS system, and amendment of the Excise duty act to revert to the hybrid system (Higher of specific or ad valorem rates).
Effect of Tax Mobilization on External Public Debts in Kenya
(KESRA/Moi University, 2020) Gacheru, Esther Wambui
The rate at which Kenya is borrowing has been on the rise in the past five years to harmonize the budget deficit resulting from low revenue collection which cannot cater for the desired expansion of the economy and development of infrastructure. Kenya’s external public debt is on the rise and portrays a state of distress. There is therefore need to examine whether there are threats of debt overhang in Kenya and how tax mobilization can enhance external public debts servicing. Thus the current study sought to investigate the relationship between of tax mobilization and external public debts in Kenya. The study was guided by tax reforms, tax mobilization strategies and how tax mobilization resources as independent variables and external public debts in Kenya as dependent variable. Four major theories guided the study namely theory of tax smoothing, classical theory of public debt, Keynesian debt theory, and Lerner’s theory of functional finance. The study used primary and secondary data. The target population of the study comprised of 1332 domestic taxes department staff in KRA. The study employed stratified random sampling technique in coming up with a sample size of 308 respondents. Descriptive statistics was used in organizing and summarizing the data while regression and correlation analysis were used to test the study hypotheses by establishing the relationships between independent and dependent variable. In regard to primary data the study found that tax mobilization reforms (β1=0.558, p=0.0276<0.05), tax mobilization strategies (β2=0.731, p=0.285<0.05) and tax mobilization resources (β3=-0.620, p= 0.0249<0.05) have a significant effect on the level of external public debt in Kenya. The study concluded that the level of external public debt relies on tax mobilization reforms, tax mobilization strategies and tax mobilization resources. However, in regard to secondary data the results of the regression analysis revealed that the tax mobilization resources were statistically significant (β0=1.308, p= 0.357>0.05). The results imply that for any unit change in tax mobilization resources would lead to a decrease in external public debt by 1.308 units holding all other factors constant. From the findings, the study recommends a multipronged and multiagency approach towards reducing public debt. The Kenyan government should also aim to reduce its recurrent expenditure characterized by huge wage bill that stifles the mobilized revenue.
Factors affecting Turnover Tax Compliance in micro, small and medium enterprises (MSMEs) sector in Roysambu area in Nairobi.
(KESRA/Moi University, 2020) Muthinji, Jesse; Dr. Nekesa, Marion; Dr. Kirui, Daniel
The purpose of the study was to analyze factors affecting Turnover Tax Compliance in micro, small and medium enterprises (MSMEs) sector in Roysambu area in Nairobi. The study was guided by three objectives namely; to determine the effects of economic factors on Turnover Tax Compliance in Roysambu area, to determine the effects of political factors on Turnover Tax Compliance in Roysambu area and to determine the effects of psychological factors on Turnover Tax Compliance on MSMEs in Roysambu area. The problem statement was to assess whether the government efforts to reach small traders by introducing turnover tax was enhancing tax compliance among MSMEs. The study was guided by economic theory, social influence theory and theory of reasoned behavior. The study will greatly benefit the government of Kenya since it will contribute to lasting solutions of non-compliance with tax laws in Kenya, this will help Kenya Revenue Authority to meet or reduce the tax revenue collection target gap. The study will also provide insights to the policy makers on the factors to consider while making laws to ensure tax noncompliance level is reduced to minimum levels, this will also go hand in hand in coming up with efficient and effective tax collection policies and systems. The study will help the taxpayers to know what they are supposed to do for them to comply, also help them to know what await them if they do not comply. The study adopted the descriptive and explanatory survey design. The target population was 11,501 respondents. The study collected primary data from a sample of 386 taxpayers which were selected through random sampling. The data collected was tested for validity and reliability and analyzed and economic factors, political factors and psychological factors were found to have significant effect on Turnover Tax Compliance. Multiple regression analysis were performed with; economic factors on Turnover Tax Compliance on Roysambu evidence of p=0.006, ρ<0.05, on political factors on Turnover Tax Compliance Roysambu evidence of p=0.003, ρ<0.05 and psychological factors on Turnover Tax Compliance Roysambu evidence of p=0.000, ρ<0.05. The study then made conclusions on economic factors, political factors and psychological factors that all the independent variables were found to play a significant role in the Turnover Tax Compliance on MSMEs in Roysambu area. The study recommended that KRA should pay attention on Tax rates which affect compliance and amount of tax payable, KRA should also satisfy taxpayer by services offered which will make taxpayer trust the Government. Finally, KRA should look into Perceived pressure that influences Turnover Tax Compliance. Therefore, the study suggests the need for more studies to explore the contribution of determinants of Turnover Tax Compliance in Kenya in more detail.
Technology Acceptance and Tax Compliance among Hotels in Taita Taveta County, Kenya
(KESRA/Moi University, 2020) Nyandieka, Joash Omariba; Nekesa, Dr. Marion; Koske, Dr. Naomi
Tax is the main source of Government revenue accounting for over 80% of the total revenue. Due to this, the Kenya revenue authority has over time tried to ensure total tax compliance by coming up with new technological systems moving from integrated tax management system in 2014 to the current i-tax system for tax registration, filing of tax returns and payment of tax due by tax payers. Even with the advancement in technology and making e-filing compulsory, the Kenya Revenue Authority is yet to achieve full tax compliance. This is manifest in failure by the Kenya Revenue Authority to meet its targets by an average of 10% between year 2014 to year 2018. This study was conducted to establish the relationship between technology acceptance and tax compliance for hotel sector in Taita Taveta County. The specific objectives of the study were to establish relationship between Perceived ease of use and tax compliance for hotel sector in Taita Taveta County, to establish relationship between perceived usefulness and tax compliance for hotel sector in Taita Taveta County and to establish relationship between perceived risk of use and tax compliance for hotel sector in Taita Taveta County. The study was guided by the following four theories: deterrence theory, behavioral theory, theory of technology acceptance and diffusion of innovations theory. The study targeted hotel managers and adopted explanatory research design. A pilot study was conducted in Kinango Sub-county of Kwale County to test the validity and reliability of research instruments that were used for the study. The study collected primary data from a sample of 71 hotel managers selected through simple random sampling from a population of 240 hotels. Data was tested for validity and reliability and analyzed using descriptive and inferential statistics. The adjusted R2 of the regression model was 0.598. The findings indicated that perceived usefulness had a positive and significant relationship with tax compliance (β=1.175, p=0.000). Perceived ease of use had a positive and significant relationship with tax compliance (β=0.432, p=0.027). Perceived risk of use had a negative and significant relationship with tax compliance (β= -0.915, p=0.000). The study concluded that there was a significant relationship between technology acceptance and tax compliance. Based on the findings, the study recommended that management of the hotels in Taita Taveta should educate their employees on the importance and usefulness of using technology. They should create an environment that allows employees to accept technology such as investing in the best information technology infrastructure. The management should also invest in training their employees on information technology skills. This will make it easy for employees to adopt and use tax information technology systems. Further, the management should find ways of eliminating possible risks associated with use of technology including financial risks, privacy risk and performance risk. The government should also put measures and policies in place that protect users of electronic tax systems such as i- tax.
Effect of Tax Incentives on Foreign Direct Investments inflows in Kenya
(Kenya School of Revenue Administration_Moi University, 2020) Kamau, Simon Munene
The study sought to determine the effect of tax incentives on foreign direct investments inflows in Kenya. The objectives were: to determine the effect of farm work deductions, Industrial building allowances, investment deductions and wear and tear allowances on foreign direct investment inflows in Kenya. The study was conducted at the macro level and therefore was looking at tax incentives and foreign direct investment inflows for the country annually. Secondary data was collected for a period of 10 years (2008 to 2017) on an annual basis. The study employed an explanatory research design. The researcher also conducted inferential statistics specifically correlation and regression analysis. A multiple linear regression model was used to analyze the relationship between tax incentives and foreign direct investment inflows. Statistical package for social sciences version 22 was used for data analysis purposes. F test and t test were applied to test the significance of the overall model and individual parameters respectively. Diagnostic tests were carried out on the collected data to ensure it is reliable and stable for the analyses. From the results, the R-square value was 0.633 which can be translated to mean that 63.3% of the variations in foreign direct investment inflows in Kenya are attributable to the four selected independent variables and the 36.7 percent remainder are attributable to other factors beyond the scope of this research. The study also revealed a strong connection of predictor variables and foreign direct investment inflows (R=0.796). Analysis of variance (ANOVA) results at 5% significance level show an F statistic of 2.160 which was less than the critical value and hence the model was found not statistically significant. Additionally, the results showed that, industrial building allowances and investment deductions are statistically significant factors affecting foreign direct investment inflows while farm works deductions and wear and tear allowances do not substantially determine foreign direct investment inflows in Kenya. The recommendation made by the study was that more focus should be placed by policy makers to the current levels of industrial building allowances and investment deductions since they have a significant influence on foreign direct investments inflows in the Kenya. The study recommends the need for further studies to focus on the other variables that determine foreign direct investment inflows in Kenya.
Effects of Tax Education on Tax Compliance among the Small and Meduim Enterprises in Nairobi City County, Kenya
(KESRA/Moi University, 2020) Kamau, Raphael Kakaa ;Dr. Muraga David ; Dr. Cheboi Yegon
Governments are striving to rally greater tax revenue domestically by increasingly reaching out to inform and engage taxpayers, aiming to foster an overall culture of compliance, in which citizens understand paying taxes as an essential aspect of their connection with their government. Taxpayer education is the channel linking tax administration and citizens and a significant tool to change tax culture. Studies done on tax compliance globally revealed that the level of the SMEs tax compliance in the developed nations is higher due to tax education. In Africa, the SMEs tax compliance rate is low and majority of the revenue authorities are unable to meet the tax targets due to inadequate tax education. SMEs have the potential to produce a lot of government revenue in Kenya, but this is not the case. It poses a huge threat to the country’s growth as a whole. Against this background, the purpose of this study was to uncover the effects of tax education on tax compliance in Nairobi City County among SMEs. In particular, the study aimed to determine the effect of electronic taxpayers, stakeholder awareness programs and print media education on tax compliance among medium-sized enterprises in Nairobi City County, Kenya. The theories used are the economic deterrence theory and vroom’s expectancy theory. An explanatory research design was used. The target population was 170197 licensed SMEs in Nairobi City County. Out of this, a sample of 384 SMEs was selected. The data was distributed to administrators, compliance officers and accountants of SME companies through the use of standardized questionnaires. Using descriptive and inferential statistics, data was analysed. A multiple regression model was used to assess the relationship between the research variables. The results showed an R squared of 0.683, suggesting that 68% of differences in tax compliance are explained by all predictor variables. The outcome also revealed that electronic taxpayer education (β1 = 0.242, P = .000); stakeholder sensitization programme (β2= 0.349, P =.000); and print media education (β3= 0.132, P =.014) had a positive and significant effect on tax compliance among small and medium enterprises. The study concluded that when combined, electronic taxpayer education, stakeholder sensitization programme and print media education positively and significantly impact tax compliance among the small and medium enterprises. In particular, stakeholder sensitization programme was identified as the most significant predictor of tax compliance, followed by electronic taxpayer education and lastly print media education. The study recommended the need for the KRA management to strengthen aspects relating to electronic taxpayer education including having adequate tax materials in the internet, enhancing I tax system and use of tax advertisements. It should also strengthen strategies relating to stakeholder sensitization programme such as seminars, workshops and road shows. Finally, the management should strengthen aspects relating to print media education including taxpaying culture, ethical attitudes and public awareness. This study makes significant contribution to theory, policy and practice in the area of tax education and compliance.
Effect of Tax incentives on Financial performance of domestic Airlines in Kenya
(Kenya School of Revenue Administration_Moi University, 2020) Chege, John Gaturo
Kenya. The study results are expected to go a long way in benefitting The profitability of the airlines in Kenya has been dismal over the years unlike their counterparts in the region. Studies relating to effect of tax incentives were done in developed and other developing countries other than Kenya. Similarly, some of these studies did not focus on domestic airlines. The current study sought to address the research gaps in literature by focusing on the effect of tax incentives on financial performance of domestic airline companies in Kenya. Therefore, the specific objectives of the study are: To establish the effect of capital allowances, export promotion incentives, tax holidays and VAT exemption on financial performance of domestic airlines in various beneficiaries such as the government, researchers, researchers and academicians and corporate tax payers. The research was guided by Peacock Wiseman Theory of Public Expenditure, optimal tax theory, q theory of investment and Agency theory. The study adopted a descriptive research design where a census was used. The target population was the 15 Domestic airlines in Kenya. Data was collected from audited annual financial reports for individual firms found on the company’s website and library. The study collected data for a period of 5 years 20142018. The study analyzed data by use of inferential and descriptive statistics that consist of mean, standard deviation, regression and measures of variations. The study concludes capital allowances incentives had a direct effect on the financial performance of domestic airline companies in Kenya. Some of the capital allowances enjoyed by domestic airline companies in Kenya include wear and tear allowances, and investment deduction. during the 5-year period (2014 to 2018) the capital allowance incentives to domestic airline companies has exhibited a dense volatility trend and wear and tear allowances are charged on capital expenditure on machinery and equipment led to positive financial performance of domestic airline companies in Kenya. The study concludes that provision of export promotion incentives promotes financial performance of domestic airline companies in Kenya, there exists a positive correlation coefficient between performance of domestic airline companies and export promotion. The study concludes that tax holidays had a direct significant influence on financial performance of domestic airline companies in Kenya, tax holidays by the current regime enables the domestic airlines to start and stabilize, tax holidays enable domestic airlines firms. The study concludes that VAT exemption incentives had a direct significance on financial performance of domestic airline companies in Kenya. The study recommends that the stakeholders in tax policy should reconsider the economic value of capital allowances incentives. The Government of Kenya should increase the capacity for it to incentives and negotiate for mutual and better benefits with the domestic airlines and other investors. The Government of Kenya should consider increasing the tax incentives granted to attract foreign direct investment, especially those provided to domestic airlines and other investors.
Effect of Tax Payer Education on Tax Compliance among SMEs in Kenya, A case of motor vehicle spares traders Iin Nakuru Town Suburb Area
(Kenya School of Revenue Administration_Moi University, 2020) Njoki, Mwangi John
The level of tax compliance among the small and medium tax payers is described as low by Kenya Revenue Authority. Kenya's SMEs have the potential to generate a great deal of tax revenue for the government, but that's not the case. The main objective of this study was to determine the effect of tax-payer education on motor vehicles traders' tax compliance in the Nakuru Town suburb of Kenya. The specific objectives included: to determine the effect of main stream media education, print media education, social media education and KRA stakeholders’ forums education on tax compliance among motor vehicles spare traders in Suburb area of Nakuru town, Kenya. The study was anchored on four theories: theory of planned behavior, economic deterrence theory, optimal taxation theory and presumptive taxation theory. Explanatory research design was adopted. The target population for the study was 300 traders dealing in motor vehicles spares in Suburb area of Nakuru town. A sample size of 150 traders was selected using simple random sampling technique. The study collected primary data by use of structured questionnaires. To explain the characteristics of the study variables, data collected was calculated and analyzed using descriptive statistics including frequencies, percentages, means and standard deviations. The relationship between the independent variable and the dependent variable was tested using inferential statistics such as Pearson correlation and regression. The findings indicated a combined R square of 0.615. This shows that main stream media education, social media education, KRA’s stakeholder’s education forums and print media tax payers education explains 61.5% of the tax compliance. The findings also indicated that print media tax payer’s education (β=0.315, p=0.000, R Square=0.414), social media education (β=0.292, p=0.000, R Square=0.381), main stream media education (β=0.205, p=0.003, R Square=0.285) and KRA’s stakeholder’s education forums (β=0.184, p=0.003, R Square=0.310) had a positive and significant effect on tax compliance among motor vehicles spare traders in Suburb area of Nakuru town, Kenya. The study concluded that all the independent variables (main stream media education, social media education, KRA’s stakeholder’s education forums and print media tax payer’s education) jointly have a positive and significant relationship with tax compliance. The study recommends inclusion of tax education in Kenya primary and education curriculum to prepare young learners who are future tax payers on the importance of tax compliance. The study also recommends that the KRA needs to scale up its social media engagement of the enlightenment of taxpayers since the use of social media platforms is very convenient given the advent and advantages brought about by use of smartphone technology. The business traders in Nakuru town are likewise, encouraged to adhere to tax compliance since the compliance is more beneficial to the country’s economy. In addition, they need to acknowledge the information updated on the social media platforms, newspapers as well as the ones advertised on national televisions.
Impact Of Indirect Tax Policy Reforms On Revenue Perfomance In Kenya
(2020) Kiara, Faith Gatwiri
The largest source of government revenue in Kenya is taxation. Domestic revenue mobilization is a key priority for providing governments with funds to deliver public services, for sustainable development agendas and investing in development. Tax and non-tax revenue are critical components of domestic resource mobilization. Over the years, there have been major changes in tax systems of various countries including Kenya. The motivation for these reforms has varied from country to country. For many developing countries, the impending fiscal crisis has provided the need for immediate tax reforms to enhance revenues. Kenya has undertaken massive tax reforms since the late 1980s under the Tax Modernization Programme. The significance of Indirect taxes over direct taxes as a means of raising government revenue, has gained momentum and is viewed as more favorable for investment and growth. Little is known about the performance of the reforms in terms of its revenue raising capacity for each tax category. This study aims to examine the impact of tax reforms in respect to pre- and post- reform periods and the factors underlying the observed trends of indirect taxes as one of the revenue sources that is not fully utilized. The objectives of the study were to establish the effects of introduction of Withholding VAT agents, Introduction of EGMS and switching the tax system from hybrid to a uniform specific or ad valorem Excise tax regime on revenue collection in Kenya. Annual secondary data spanning the period 2010-2019 was used in the analysis. The source of the data was mainly Kenya Revenue Authority and Kenya National Bureau of Statistics. Impact evaluation techniques (regression discontinuity and difference-in-difference) also known as quasi panel analysis techniques were used in the analysis. Stata software was employed in the analysis. From the difference-in-difference model, the analysis reveals that the introduction of EGMS led to an increase in excise revenue by 81.2%. This was significant at 1% level of significance. VAT increased by 13.4 per cent following the introduction of VAT withholding agents. This was equally significant at 5% level of significance. These findings are expected to shape policy direction that is aimed at enhancing domestic revenue mobilization. Based on the findings, the study recommends that the Commissioner of Domestic taxes should map all Medium Taxpayers (MTO) based on risk assessment and enroll additional taxpayers who can serve as potential VAT withholding agents. Further, the study recommends the broadening of the scope of goods covered under the EGMS system, and amendment of the Excise duty act to revert to the hybrid system (Higher of specific or ad valorem rates).
Determinants of consumption tax compliance among micro and small enterprises in Ruiru Town
(Kenya School of Revenue Administration_Moi University, 2020) Thuku, Mike Njogu
Micro and small enterprise sector is the largest employer in Kenya accounting for over 80% of all employment. The sector also contributes significant proportion of the national GDP estimated to be over 20%. However, tax revenue contribution from this sector is below expectation and accounts for less than 3% of all tax revenue collected. This study was conducted to establish the determinants of consumption tax compliance among micro and small enterprises in Ruiru town. The specific objectives of the study were to determine the effect of tax administration on consumption tax compliance among micro and small enterprises in Ruiru town, to establish the effect of the size of enterprises on consumption tax compliance among micro and small enterprises in Ruiru town and to determine the effect of taxpayer education on the level of consumption tax compliance among micro and small enterprises in Ruiru town. The study was founded on social contract and ability to pay theories which express tax as a contractual obligation payable according to taxable capacity of taxpayers. The study targeted micro and small enterprises in Ruiru town in Kiambu County and adopted an explanatory research design to understand what, why and by how much, aspects of micro and small enterprises determine consumption tax compliance among these enterprises. A pilot study was conducted in Juja town to test the validity and reliability of the research instruments that were used for the study. A structured questionnaire was used to collect primary data from a sample of 127 enterprises which were selected through random sampling from a population of 161 micro and small enterprises licensed by Ruiru Sub-county Business Licensing Department. The data collected was tested for validity and reliability and analyzed. Tax administrations, size of enterprise and taxpayer education were found to have significant effect on consumption tax compliance with p<0.05 for all the variables. Tax administration was found to have a Beta coefficient of 0.363, 0.223 for size of enterprise and 0.636 for taxpayer education against consumption tax compliance respectively. The independent variables were found to cause 36.9% change of compliance tax compliance when combined with R Square of 0.369 at p<0.05. Multiple regression analysis was performed and yielded the regression equation of the study. The study then made conclusions on tax administration, Size of the enterprise and taxpayer education that all the independent variables were found to play a significant role in the consumption tax compliance among micro and small enterprises in Ruiru town. The study found that tax compliance checks and tax audits have a significant effect on consumption tax compliance and recommended that KRA should employ qualified staff who will be able to conduct comprehensive tax audits and those found to be non-compliant should be encouraged and assisted where necessary. The study also recommended that KRA should simplify the procedures and processes involved in filing of returns and payment of taxes and make them understandable and executable by all taxpayers including those without special expertise. The study also recommended enhancement of taxpayer education through incorporating it as a subject in school curriculum from lower levels of education. Tax seminars should be made more frequent, free of charge and open for all and properly publicized to reach more people. It was also recommended that KRA focus on all enterprises irrespective of their size to promote tax compliance for all enterprises.
Technology Acceptance And Tax Compliance Among Hotels In Taita Taveta County, Kenya
(2020) Nyandieka, Joash Omariba
Tax is the main source of Government revenue accounting for over 80% of the total revenue. Due to this, the Kenya revenue authority has over time tried to ensure total tax compliance by coming up with new technological systems moving from integrated tax management system in 2014 to the current i-tax system for tax registration, filing of tax returns and payment of tax due by tax payers. Even with the advancement in technology and making e-filing compulsory, the Kenya Revenue Authority is yet to achieve full tax compliance. This is manifest in failure by the Kenya Revenue Authority to meet its targets by an average of 10% between year 2014 to year 2018. This study was conducted to establish the relationship between technology acceptance and tax compliance for hotel sector in Taita Taveta County. The specific objectives of the study were to establish relationship between Perceived ease of use and tax compliance for hotel sector in Taita Taveta County, to establish relationship between perceived usefulness and tax compliance for hotel sector in Taita Taveta County and to establish relationship between perceived risk of use and tax compliance for hotel sector in Taita Taveta County. The study was guided by the following four theories: deterrence theory, behavioral theory, theory of technology acceptance and diffusion of innovations theory. The study targeted hotel managers and adopted explanatory research design. A pilot study was conducted in Kinango Sub-county of Kwale County to test the validity and reliability of research instruments that were used for the study. The study collected primary data from a sample of 71 hotel managers selected through simple random sampling from a population of 240 hotels. Data was tested for validity and reliability and analyzed using descriptive and inferential statistics. The adjusted R 2 of the regression model was 0.598. The findings indicated that perceived usefulness had a positive and significant relationship with tax compliance (β=1.175, p=0.000). Perceived ease of use had a positive and significant relationship with tax compliance (β=0.432, p=0.027). Perceived risk of use had a negative and significant relationship with tax compliance (β= -0.915, p=0.000). The study concluded that there was a significant relationship between technology acceptance and tax compliance. Based on the findings, the study recommended that management of the hotels in Taita Taveta should educate their employees on the importance and usefulness of using technology. They should create an environment that allows employees to accept technology such as investing in the best information technology infrastructure. The management should also invest in training their employees on information technology skills. This will make it easy for employees to adopt and use tax information technology systems. Further, the management should find ways of eliminating possible risks associated with use of technology including financial risks, privacy risk and performance risk. The government should also put measures and policies in place that protect users of electronic tax systems such as i tax.
Automation Activities, Capacity Building and Revenue Collection Performance at Kenya Revenue Authority
(Kenya School of Revenue Administration_Moi University, 2020) Nthenge, Miriam
The Kenya Revenue Authority has over the years failed to meet its revenue collection target. This has been associated with the systems that are still operating manually in the tax collection process. This study's general objective was to examine the role of automation activities and capacity building on revenue collection performance in the Kenya Revenue Authority. The specific objectives were: to examine the role of process automation on performance in revenue collection performance at KRA; to assess the role of capacity building on the collection of revenue at KRA; and to determine the moderating effect of capacity building on the relationship between Process automation and revenue collection performance. The research was guided by the theory of public expenditure, technological determinism, and social determinism. Explanatory research design was employed. A sample of 384 employees working in the department of Domestic Taxes and Customs and Border Control Department were selected using a systematic sampling technique from a target population of 4108 employees working in the two departments. Questionnaires were used to collect primary data. Descriptive and inferential statistics were employed in data analysis. Descriptive statistics included means and standard deviations to describe the characteristics of the variables. Inferential statistics included correlation and regression analysis, which tested the relationship between variables. The study adopted Hierarchical regression model. The findings indicate that process automation (β = .618, p = 0.000, R2.441, ΔR2.374) and capacity building (β = .374, p= 0.000, R2.540, ΔR2.099) significantly influence revenue collection performance. In addition, capacity building moderates the relationship between process automation and revenue collection performance (β= -.098, p = 0.034, R2.547, ΔR2.006). This information provides practical solutions on process automation to KRA management as results of the study have shown a positive notable effect of process automation on revenue collection performance and therefore the management should ensure that the systems are improved continuously so as to match with the current technological situation. The study also provides practical solutions on capacity building to KRA management, findings have shown a positive significant effect of capacity building on revenue collection performance and therefore the management should invest more in building the capacity of its staff. KRA policymakers should develop policies on training programs such as ITAX, ICMS, and EGMS to enhance employee performance and improve productivity.
Effect of Taxpayer Education on Tax Compliance among Micro & Small Enterprises in Kenya, Case of Tax Payers in East Tax Area
(Kenya School of Revenue Administration_Moi University, 2020) Wanjiru, Stella Wanjiku
Tax Compliance concerns are as old as taxes themselves and will remain an area of discovery as long as taxes exist. Taxes are the biggest source of revenue for governments to finance development. Poor tax knowledge has a number of potentially serious implications, mainly because it can certainly affect tax compliance. There is therefore the need to establish whether a bridge in the knowledge gap would result in enhanced compliance. This study sought to address this gap by establishing the effect of taxpayer education on tax compliance among MSEs in Kenya. Specifically, the study endeavored to determine the influence of taxpayer education programs on tax compliance, establish the effect of tax knowledge on tax compliance, assess the effect of the use of technology on tax compliance and investigate if a taxpayer’s profile affects tax compliance. The independent variable was taxpayer education whilst the dependent variable was tax compliance. The study explored the theory of reasoned action, economic deterrence theory, and the social influences theory to explain the concept of tax compliance and the various motives behind tax non-compliance. The study was conducted in Migingo Block - (Nairobi’s Riveroad and Kamukunji areas) Nairobi county as classified by KRA. The target population was 612 taxpayers with a sample size of 242. Data were analyzed using both descriptive and inferential statistics. The study also used regression analysis to establish the relationship between the independent and dependent variables. The study revealed that taxpayer education programs influence tax compliance positively (β=0.402, p =0.007). In addition, tax knowledge influences tax compliance positively (β=0.402, p=0.005). Further, the use of technology has a positive and significant effect on tax compliance (β=0.376, p=0.002). Finally, the taxpayer’s profile had a positive and significant effect on tax compliance (β=0.227, p=0.003). The study concluded that taxpayer education programs, tax knowledge, use of technology, and taxpayer’s profile influence tax compliance which is proved by the R square of 0.610, thereby rejecting the null hypotheses. The study findings form a new body of knowledge in the stated objectives. The results also form a platform for relevant policy advocacy and change and empower taxpayers to know more and articulate their rights regarding tax compliance. The study concluded that taxpayer education affected tax compliance among MSEs in Kenya. Specifically, the study concluded that taxpayer education programs, tax knowledge, use of technology, and taxpayer’s profile affected tax compliance positively. Further, the study concluded that improved taxpayer education would help to improve tax compliance. The study recommends further studies focusing on specific types of taxes such as VAT, Presumptive tax performance should be conducted. This would help to determine the difference of effect tax education on each of their performances compared to tax compliance. Further, studies focusing on the customs duties of taxpayers should be conducted since they were not targeted in this study. This would help to make comparisons.
Effect of Financial Performance on Corporate Taxes among Firms Listed at the Nairobi Securities Exchange
(Kenya School of Revenue Administration_Moi University, 2020) Mutinia, Simon Mwangi
This study sought to determine the effect of financial performance on corporate taxes among firms listed at the NSE. The population for the study was all the 65 companies listed at NSE as at 31st December 2018. Data was obtained from 56 firms that were consistently listed for the five years (2014 to 2018) giving the researcher 280 data points. The independent variables for the study were profitability as measured by return on equity, firm value as measured by market value of equity to book value of equity and firm efficiency as measured by the ratio of total revenue to total assets whereas corporate taxes as measured by effective tax rate was the dependent variable. The study used secondary data that was collected over the period of study of five years (2014-2018) on annual basis. The research design was cross sectional design while the data was analyzed using multiple linear regression so as to find out the association amongst the variables. Stata version 13 was used for data analysis purposes. The study found that profitability (β=0.032, p=0.029), firm value (β=0.095, p=0.000) and firm efficiency (β=0.082, p=0.001) had a positive and significant relationship with corporate taxes among NSE listed firms. The results also indicated R2 of 0.1468 which implied that profitability, firm value and firm efficiency contributed 14.68% to variations in corporate taxes. It was shown by the ANOVA outcomes that the F statistic is significant at 5 % significance level with P=0.000. It was therefore appropriate to use this model in explaining the relationship. Further the results exhibited that all the independent variable profitability, firm value and firm efficiency produced positive and statistically significant values for this study. The study recommends government through the policy makers should create a conducive environment for the firms listed at the NSE which translates to more profitability leading to more corporate taxes and consequently triggering economic growth. Firms should also seek ways of increasing their assets base which would translate to more corporate taxes and consequently leading to a better environment. The study further recommends the need for listed firms to hire managers that are dedicated and competent enough to enhance firm efficiency and firm value as these two were also found to enhance the level of corporate taxes. To achieve this, firms might have to incur agency costs with an aim of aligning the goals of managers with those of shareholders.

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