1. Masters in Tax & Customs Administration

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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.
The Causal Effect Between Tax Revenue And Economic Growth In Kenya
(2021) Kimani, Francis Kamau
The rapid-sporadic growth in government expenditure in Kenya has triggered concerns among policy makers on the repercussion of such growth on tax collection and the effect on the long run economic growth. The study sought to explore the relationship between tax revenue and economic growth in Kenya. The specific objectives were to; establish the causal effect between PAYE, corporation tax, value added tax, and excise duty on economic growth in Kenya. The study was anchored on the dynamic theory of public spending, taxation, and debt, the benefit theory, ability to pay theory, Neo-classical theory of growth and endogenous growth theory. The causal research design was adopted in the study. The study used secondary data that was obtained from the Central Bank of Kenya and the Kenya National Bureau of Statistics for the period 1989 to 2019. Time series analysis technique was adopted to determine the relationship between tax revenue and economic growth. The findings revealed that independently (β=1.198204, P=0.0011) and jointly (β=21.81471, P=0.0416), PAYEE had a positive and significant relationship with economic growth. Results also indicated that independently ((β =1.180804, P=0.0008) and jointly (β=22.50137, P=0.0339), corporation tax had a positive and significant relationship with economic growth. Results further revealed that independently, value-added tax had a positive and significant relationship with economic growth in Kenya (β =2.823958, P=0.0011). In addition, the findings showed that independently, excise duty had a positive and significant relationship with economic growth in Kenya (β =2.423642, P=0.0040). The study concluded that tax revenue contributes significantly towards enhancing economic growth in Kenya. The study recommendation is that the government of Kenya should strengthen tax policies, which is likely to increase revenue collection. The study also recommends that the government of Kenya should make structural adjustments to value-added tax and excise duty related policies, to ensure that there is adequate collection of taxes from these channels since there are less inconvenient and burdensome to the taxpayer since they are incorporated on the price of commodities and are not paid in lump sum like direct taxes and the taxpayer may not feel the burden of the tax since the obligation to collect and remit is placed on third parties. Further, consumption taxes (VAT & Excise tax) have a wider tax base which is paramount in ensuring equitable distribution of the tax burden on the target population.
Contribution of Excise Duty Reforms to Excise Duty Compliance by Kenya Revenue Authority
(KeSRA/Moi Unpublished Research Project, 2019-11) Nzioka, Peter Maingi
Contribution of Tax Incentives on Revenue Performance among Special Economic Zones Enterprises in Kenya
(KeSRA/Moi Unpublished Research Project, 2019-11) Korir, Goeffrey
Corporate Governance Practices and Tax Disclosure among Firms Listed at the Nairobi Securities Exchange, Kenya
(Unpublished Research Project, 2019) Kigo, Caroline Wambui
Determinants of capital gains tax performance among property owners in Nakuru City, Kenya
(KeSRA_Moi University, 2023) Lesupeer, Mpukiyan Peter
Tax compliance remains to be a very crucial subject to researchers in many parts of the world across the globe. Despite the increasing need to raise the level of revenue collection, developing countries still face the challenges of low tax compliance. Capital gains taxes for practical and political reasons are perpetually riddled with exemptions and exceptions making them complicated to administer and to comply with. The big complication is determining the true capital gain net of inflation after netting out the purchase price and the cost of maintenance and investment in the asset over the years. The main objective of this study was to establish the determinants of Capital Gains Tax performance among property owners in Nakuru City, Kenya. The specific objectives were to determine the effect of taxpayers‟ sensitization, systems automation and taxpayers‟ perception on capital gains tax performance. This study was built on the benefit theory of taxation, universal theory of acceptance and use of technology and social influence theory. The study adopted explanatory research design. The target population was 6,231 property owners with movable and immovable properties in Nakuru City where a sample of 376 property owners was drawn. Primary data collection was employed in the study using structured questionnaires. The study used descriptive statistics and multiple linear regression analysis to establish the effect of the determinants of capital gains tax performance. The study findings showed that taxpayers‟ sensitization, systems automation and taxpayers‟ perception had a statistically positive significant effect on capital gains tax performance with evidence of beta values of: taxpayers‟ sensitization (β1=0.357, p=0.000<0.05),systems automation (β2=0.261, p=0.003<0.05) and taxpayers‟ perception (β3=0.285, p=0.001<0.05).The study results concluded that taxpayers‟ sensitization, systems automation and taxpayers‟ perception had significant influence on capital gains tax performance. Based on the findings, the study recommends that KRA should pay more attention on taxpayers‟ sensitization that contributes to online payment process being efficient in payment of taxes. The study therefore suggests that future research should be conducted to investigate effect of other variables such as cost and tax knowledge on Capital Gains Tax performance.
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.
Determinants of Corporation Tax Performance among Small and Medium Enterprises in Nairobi Central Business District,Kenya
(KeSRA/Moi Unpublished Research Project, 2022) Mbewa, Gordon Oscah Ochieng
Corporation tax is a key source of revenue for most governments across the globe that enables them to provide public goods and services such as free education, subsidized medical services and infrastructure. However, its performance in Kenya has been below target. This is majorly attributed to the SMEs who despite contributing significantly to the GDP are under taxed. This study was to determine factors affecting corporation tax performance among small and medium enterprises Nairobi central business district, Kenya. The objectives of the study were Specifically, to determine the effect of taxpayer education on corporation tax performance among small and medium enterprises Nairobi central business district, to establish the effect of system automation on corporation tax performance among small and medium enterprises Nairobi central business district, to determine effect of tax audit on corporation tax performance among small and medium enterprises Nairobi central business district and to establish the effect of deterrence sanctions on corporation tax performance among small and medium enterprises Nairobi central business district. The study was supported by three theories of taxation namely; Ability to pay theory, Economic Deterrence Theory and Theory of Technology Acceptance. The study adopted an explanatory research design. The target population was 3461 who are small and medium enterprises in Nairobi central business district and Sample size of 358 respondents The primary data was collected by use of questionnaires, Regression analysis was used to determine the significance and relationship of the variables. Statistical tools for data analysis comprising descriptive and inferential statistics were applied to evaluate variations in manifestations of the variables and to test the hypotheses respectively. The findings indicated that the independent variables had a statistically positive significant effect on corporation tax performance: taxpayer education (β 1= 0.237, p=0.000<0.05), system automation (β 2= 0.275, p=0.000<0.05) tax audit (β 3= 0.359, p=0.002 <0.05) and deterrence sactions (β 3= 0.281, p=0.000 <0.05) The results concluded that taxpayer education, system automation, tax audit and deterrence sanctions significantly affect corporation tax performance. Based on the findings, the study recommends that KRA to pay more attention on tax audit that would enhance corporation tax performance. Therefore, future research can be done on other variables such as the effect of compliance cost on corporation tax compliance among SMEs in Nairobi County Kenya.
Determinants of Digital Service Tax Awareness among Digital Corporations in Kenya
(KeSRA/Moi Unpublished Research Project, 2022) Kiondo, Justus Kamau
Global digital economy has presented a disruptive market economy where goods and services are traded online without the necessity to have a physical presence in the location where which sales are realized. This presents to many governments in the world the challenge of collecting the rightful amount of tax revenue from these digital economy platforms. Still, majority of these firms trading within the digital economy are not compliant. This study seeks to establish the determinants of digital service tax awareness among digital corporations in Kenya. The objectives of the study were to determine the tax knowledge, fairness of the tax and digitalization on digital service tax awareness among corporates in Kenya. The study was supported by three theories namely; The Ability to Pay Theory, The innovation diffusion theory, technology acceptance theory. The study adopted explanatory research design where the target population were all companies offering digital services in Kenya. The study adopts population census where a total of 130 corporates were subjected to the study. Primary data was used to collect the data using questionnaires. Regression and Correlation analysis was used to determine the significance and relationship of the variables. The data was analyzed using descriptive and inferential statistics. The study results showed that indeed; tax knowledge, fairness and digitalization enhances tax awareness on among corporates in Kenya. Regression analysis was conducted; the findings revealed that tax knowledge, fairness and digitalization correlate with tax awareness. The study findings indicated that tax knowledge had β1 0.398 =p value of 0.001 which is less than 0.05. Fairness β2 0.312 =p value of 0.004 which is less than 0.05. And digitalization β3 0.456 =p value of 0.000 which is less than 0.05 significantly affect digital services among corporates in kenya. The study recommends that the study recommends that the management of Kenya Revenue Authority should put more emphasis on the digitalization of services to enhance tax awareness. Further research may be done by employing secondary data from tax authorities to model tax awareness.
Determinants of E-filing system adoption among taxpayers in Gatundu South Sub-County kiambu county, Kenya
(KeSRA_Moi University, 2023-09) Njuguna, Jesse Njeru
Due to advancement in technology many countries have shifted to e-Filing Systems to enable taxpayers to file their tax returns online on their own from any location connected to the internet without necessarily visiting the KRA-workplaces for help in filing their tax returns in every calendar year within the month of June. This notwithstanding, many taxpayers are still seeking help from KRA work-places to file their tax returns and in some instances seen them request for the extension of tax filing time in every calendar year within the month of June which always forces KRA to operate for longer hours both in weekdays and weekends in order to support taxpayers in filing their tax returns invoking the issue of e-filing system adoption. It is surprising that a few studies have examined this concern yet e-filing ought to make it convenient for taxpayers to file their tax returns on their own. Consequently, the study invokes the question as to what drives taxpayers to resort to KRA work places, professionals and cybercafé for help in filing their tax returns. The study aimed to examine the determinants of e-filing system adoption among taxpayers in Gatundu South Sub-county, Kiambu County. The specific objectives were to determine the effect of perceived ease of use, perceived usefulness, facilitating conditions and user ability on e-filing system adoption among taxpayers in Gatundu South Sub County. The study was anchored on three theories; Unified Theory of Acceptance & Use of Technology, Technology Acceptance Model and Diffusion of Innovation Theory. The study employed explanatory research design. The target population for the study was 75,974 potential users of the e-filing system (iTax) in Gatundu South Sub-County who were derived from the 2019 census report by the Kenya National Bureau of Statistics. The study used random sampling technique in selecting a sample size (n) of 398 respondents in Gatundu South Sub-County. The study collected primary data through close-ended questionnaire, with a response rate of 84%. The data was analyzed using descriptive and inferential statistics to determine the association between variables, with the measurement of variables based on 5-point Likert Scale. Correlation and regression analysis provided an understanding of the relationship between the study variables. On Regression, These results indicate that the independent variable, perceived ease, perceive usefulness, facilitating conditions and user ability caused a variation of 27.3% (R2=0.273) on e- filing system adoption. The study findings indicated that perceived ease, perceived usefulness, facilitating conditions and user ability had a statistically positive significant effect on e-filing system adoption as per Beta coefficients of perceived ease (β1=0.395, p=0.000<0.05), perceived usefulness (β2=0.227, p=0.000<0.05), Facilitating conditions (β3= 0.264, p=0.000<0.05) and user ability (β4=0.009, p=0.000 <0.05). The study results concluded that perceived ease of use, perceived usefulness, facilitating conditions and user ability affect e-filing system adoption. Based on the findings, the study recommends that KRA should plan a more effective strategy and formulate policies of promoting e-filing usage among individual taxpayers in Kenya. Therefore, future studies can be extended to individual taxpayers in other Counties within the country using other variables not utilized in this study to find out what drives/invoke them to resort to KRA work-places for support in filing their tax returns which always led to extension of working hours both in weekdays and weekends by KRA country wide in every calendar year in the month of June.
Determinants of Tax Compliance among Residential Income Earners in Embakasi South Sub-County, Nairobi, Kenya
(KeSRA/Moi Unpublished Research Project, 2022-06) Kihuha, Luciah Wanjuhi
In as much as there is exponential growth in the real estate sector, this growth hower does not match with the tax revenue generated from the collection of monthly residential rental income tax. There are several attributable factors to the noncompliance in this sector, and these factors affect revenue collection in different ways. The study, therefore, investigated factors affecting tax compliance among residential income earners in Embakasi sub-county Nairobi. Three specific objectives guided the study to establish the effect of automation of services, taxpayer perception, and level of awareness on tax compliance among residential income earners in Embakasi south sub-county Nairobi. Residential income reports indicate that less than half of property owners and developers comply with residential income tax requirements in Nairobi City County. Despite the tremendous growth from real estate in Embakasi south subcounty, the corresponding tax collection from the sector has remained very low. The contribution by residential income earners has been very low despite all the efforts to enforce residential income tax policies. In Embakasi, several residential owners are under review, which has formed the need for undertaking this study. The study was guided by economic deterrence theory and the ability to pay theory. The study adopted an explanatory research design. The target population was 11,501 residential income earners in Embakasi, South Nairobi. A sample size of 386 respondents was selected using Yamane's formula. Primary data was collected using structured five-point Likert scale questionnaires. Statistical tools for both descriptive and inferential statistical data were applied to evaluate variations as manifested in the variables and test for hypotheses. The findings of the study indicated that the independent variables had a statistically positive significant effect on residential income tax compliance; thus, automation of services (β1=0.362, p=0.000<0.05), taxpayer perception (β2=0.243, p=0.000<0.05) and level of awareness (β3=0.382, p=0.001 <0.05). The results concluded that service automation, taxpayer perception, and level of awareness positively and significantly affected residential income tax compliance. Based on the study findings, the Kenya Revenue Authority should enhance the automation of services for online registration, online filing, and online payment of tax liabilities to improve income tax compliance among earners of residential rental income. Future research was suggested on other factors not covered by this study but could potentially impact tax compliance across other economic sectors.
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
Determinants of Value Added Tax Compliance among Small and Medium Manufacturing Enterprises within East of Nairobi Tax District, Kenya
(KeSRA/Moi Unpublished Research Project, 2022) Muthoka, Harrison
VAT underperformance in the financial years 2018/2019 and 2019/2020 of 12% and 7% respectively, points to challenges that exist in the collection of value added tax, though an important element of overall tax revenue performance. This challenge called for the need to investigate the determinants of VAT compliance among small and medium enterprises, due to their highest interaction with vatable goods and services. The general objective of this study was to investigate the determinants of value added tax compliance among small and medium manufacturing enterprises within the East of Nairobi tax district. The specific objectives included the effect of taxpayer awareness, cost of compliance, and tax morale on value added tax compliance. The study further sought to determine the moderating effect of automation on value added tax compliance. The study was mainly anchored on economic deterrence theory and supported by fiscal exchange, transaction cost, and tax morale theories. Explanatory research design was adopted. Target population included 9,120 SMEs in the manufacturing sector from which a sample of 383 was derived using Bridget & Lewin formula. Primary data was collected using self- administered five-point Likert scale questionnaire. Instrument validity and reliability tested above 0.7 of Cronbach Alpha test attaining the consistencies required. Cost of compliance showed negative and significant correlation with VAT compliance at - 0.665. Taxpayer awareness and tax morale were all positively and significantly correlated with VAT compliance at 0.675 and 0.659 respectively while tested at confidence level of 95%. All the determinants with moderator variable correlated with VAT compliance up to 82.8%. R 2 caused 68.6% variations across all the determinants on VAT compliance. The remainder 31.4% could be explained by other factors not included in the model such as taxpayers’ behavior among others. The model further revealed a constant of 19.818, a unit change in taxpayer awareness, cost of compliance and tax morale causes 1.661, -3.394 and 0.646 on VAT compliance respectively. A comparison between the R 2 without moderation and with moderation revealed that the R square increased from 53.1% to 68.6%, implying that automation had a substantially positive moderating influence on the relationship between taxpayer awareness, cost of compliance, tax morale, and value added tax compliance among small and medium manufacturing enterprises. The study recommends that; the Government should formulate policies targeted towards creating taxpayer awareness on how tax revenue supports provision of public goods and services, KRA should ensure the cost of complying with applicable tax laws and regulations is not expensive to taxpayers as this would lead to increased non-compliance. Religious and social institutions should be activated to help spread the belief that payment of taxes is the right thing to do. Further studies may be conducted to determine whether other aspects such as enforcement measures and human factors have significant influence on VAT compliance.
Determinants of Value Added Tax Compliance within Classified Hotels in Nairobi County, Kenya
(KeSRA/Moi Unpublished Research Project, 2022-06) Kanguru, James Karanja
Taxation is the main instrument through which governments raise finances required to provide public goods. Kenya Revenue Authority does not collect as much revenue from tax as it should as a result of low compliance. Value Added Taxpayers in particular have the potential of generating a lot of revenue for the government but this is not the case Unfortunately, Kenya, like other governments, struggles to achieve its set revenue targets. In relation to its VAT collection, KRA notes a compliance gap as high as 45%. The question of how to narrow the compliance gap is therefore timely. The hotel industry forms an integral constitution of the larger tourism sector, regarded as one of the main economic pillars of the country, with a contribution of 8.2% to Kenya’s GDP and over 1.1 million employment opportunities. This study seeks to determinants the Value Added Tax compliance among the classified hotels within Nairobi County. The objectives of the study were to determine tax compliance costs, tax knowledge, taxpayer perception and tax audit on value added tax compliance among the classified hotels within Nairobi County. The study was supported by four theories namely; The rational choice theory, The Information Asymmetry Theory, The Fiscal Exchange Theory and The Lending Credibility Theory. The study adopted explanatory research design where the target population was 60 classified hotels within Nairobi County. The study had 2 respondents each from the 60 different Hotels thus making a total of 120 respondents. Primary data was used to collect the data using questionnaires. Regression and Correlation analysis was used to determine the significance and relationship of the variables. The data was analyzed using descriptive and inferential statistics. Regression analysis was conducted; the findings revealed that, tax compliance costs had β1 -0.226 =p value of 0.000 which is less than 0.05. Tax knowledge β2 0.218 =p value of 0.000 which is less than 0.05. Taxpayer perception β3 0.302 =p value of 0.002 which is less than 0.05. Tax Audit β4 0.340 =p value of 0.003 which is less than 0.05. significantly affect classified hotels within Nairobi County. The study concluded that indeed tax knowledge, taxpayer perception and tax audit enhance value added tax compliance among the classified hotels within Nairobi County. However, compliance cost affects value added tax compliance negatively. The study recommends that, KRA should step up trainings to sensitize hotel operators on taxation matters, including required documentation and deadlines, train and carry out public awareness campaigns targeted at the hospitality sector on matters relating to taxation as well as conduct record keeping trainings to hotel operators. Further research may be done to examine the effect of tax incentives on tax compliance in the hospitality industryTaxation is the main instrument through which governments raise finances required to provide public goods. Kenya Revenue Authority does not collect as much revenue from tax as it should as a result of low compliance. Value Added Taxpayers in particular have the potential of generating a lot of revenue for the government but this is not the case Unfortunately, Kenya, like other governments, struggles to achieve its set revenue targets. In relation to its VAT collection, KRA notes a compliance gap as high as 45%. The question of how to narrow the compliance gap is therefore timely. The hotel industry forms an integral constitution of the larger tourism sector, regarded as one of the main economic pillars of the country, with a contribution of 8.2% to Kenya’s GDP and over 1.1 million employment opportunities. This study seeks to determinants the Value Added Tax compliance among the classified hotels within Nairobi County. The objectives of the study were to determine tax compliance costs, tax knowledge, taxpayer perception and tax audit on value added tax compliance among the classified hotels within Nairobi County. The study was supported by four theories namely; The rational choice theory, The Information Asymmetry Theory, The Fiscal Exchange Theory and The Lending Credibility Theory. The study adopted explanatory research design where the target population was 60 classified hotels within Nairobi County. The study had 2 respondents each from the 60 different Hotels thus making a total of 120 respondents. Primary data was used to collect the data using questionnaires. Regression and Correlation analysis was used to determine the significance and relationship of the variables. The data was analyzed using descriptive and inferential statistics. Regression analysis was conducted; the findings revealed that, tax compliance costs had β1 -0.226 =p value of 0.000 which is less than 0.05. Tax knowledge β2 0.218 =p value of 0.000 which is less than 0.05. Taxpayer perception β3 0.302 =p value of 0.002 which is less than 0.05. Tax Audit β4 0.340 =p value of 0.003 which is less than 0.05. significantly affect classified hotels within Nairobi County. The study concluded that indeed tax knowledge, taxpayer perception and tax audit enhance value added tax compliance among the classified hotels within Nairobi County. However, compliance cost affects value added tax compliance negatively. The study recommends that, KRA should step up trainings to sensitize hotel operators on taxation matters, including required documentation and deadlines, train and carry out public awareness campaigns targeted at the hospitality sector on matters relating to taxation as well as conduct record keeping trainings to hotel operators. Further research may be done to examine the effect of tax incentives on tax compliance in the hospitality industry.
Effect of AD Valorem Tax Valuation on Revenue Performance, A Case of Secondhand Motor Vehicle Dealer in Nairobi County, Kenya
(KeSRA/Moi Research Project, 2022-06) Mulwa, Justin; Dr. Omwenga Emmah
Tax revenues are a critical component of government resources in almost all economies as they support the role of government in providing public services, re-distribution of income, and implementing other fiscal policy concerns. However, tax revenue performance often faces challenges that deny many governments the ability to meet their economic growth and development ambitions. Some of these challenges are internal and while others emanate from the taxpayers. The study attempted to determine the effect of ad valorem tax valuation on secondhand motor vehicle dealers in Nairobi County. The specific objective of the study was to determine the effect of tax rates, the effect of the system of valuation, and the effect of policies and regulations on revenue performance. The study was anchored on the Laffer Curve theory, the technology acceptance model theory, and the theory of planned behavior. The study adopted an explanatory research design. The study targeted a population of 3055 employees of the department of customs and border control of the Kenya Revenue Authority segmented into various levels. A sample of 354 was drawn from the population using the Bridget and Lewin formula and the respondents' response rate of 72% was obtained. A questionnaire was used to collect primary data and analysis included both descriptive and inferential statistics. The study adopted Multiple Regression model for its inferential analyses. Descriptive statistics were presented in tables while correlation and regression analysis were used for inferential statistics. The findings of the study indicated that tax rates, system of valuation, and policies and regulations had positive and significant effect on revenue performance. These results were evidenced by the standardized beta values of 0.179 for tax rates, of 0.440 for system of valuation, and of 0. 308 for policies and regulations. A unit change in tax rates increased revenue performance by 0.179. A unit change in the system of valuation increased revenue performance by 0.440. A unit change in policies and regulation increased revenue performance by 0.308. Further, the findings of the study revealed that the correlation coefficient of R was 0.697 and the R square was 0.486. The model revealed an R squared of 0.486 where the factors under the study, contributed to 48.6% of the revenue performance while the remaining 51.4% can be explained by other factors which were not part of this study. These factors could include but not limited to demographic, cultural, economic and other externalities. Based on the findings of the study, it was concluded that tax rates, system of valuation, and policies and regulations influenced revenue performance. The study, thus, recommended that Kenya Revenue Authority, and the government should put in place concrete policies & regulatory frameworks that are favorable to Kenyan motor vehicle dealers. This is to work in harmony with the effects of regional and community blocks import barriers and that affect the importation and sale of motor vehicles. The study suggests the need for more studies focusing on other factors determining revenue performance not included in the study such as cultural, economic, social and other externalities across other properties valuations in Kenya.
Effect of Alternative Dispute Resolution on Tax Revenue Collection in Kenya
(Kenya School of Revenue Administration_Moi University, 2021) Kinyua, Linet Njeri
The Kenya Revenue Authority has been facing challenges in meeting tax revenue collection targets. This is a clear indication that there is a serious problem. The study aimed at investigating the effect of alternative dispute resolution on tax revenue collection in Kenya. The study was guided by the following specific objectives; to assess the effect of arbitration and mediation on tax revenue collection; to evaluate the effect of litigation on tax revenue collection; and to determine the effect of negotiation on tax revenue collection. The study is supported by the conflict resolution theory, optimal tax theory, ability-to-pay taxation theory, benefit theory of taxation, and expediency theory of taxation. The study adopted an explanatory research design and targeted 874 taxpayers who had adopted alternative dispute resolution for the last 2 years. A sample of 274 taxpayers was selected using random sampling technique. Descriptive and inferential analysis were adopted. The descriptive statistics included percentage, mean and standard. Inferential statistics included correlation and regression analysis. F test, beta coefficients, t value and p value were used as test statistics. The study findings showed that there was a positive and significant relationship between arbitration and mediation and tax revenue collection (β=0.321, p=0.000). Findings also showed that there was a positive and significant relationship between litigation and tax revenue collection (β=0.304, p=0.000). In addition, results showed that there was a positive and significant relationship between negotiation and tax revenue collection (β=0.383, p=0.000). The study also concluded that negotiation was commonly used as dispute resolution mechanism between taxpayers and Kenya Revenue Authority officials. Facilitators and tax experts should be updated on current trends of mediation, effectiveness and transparency of the process. Further, Kenya Revenue Authority should invest in sensitizing taxpayers regarding the alternative dispute resolution process, and in embedding the requisite skills, motivation and resources in them to use the alternative dispute resolution process effectively. The government of Kenya should form a section in the constitution to empower Kenya Revenue Authority to settle a tax dispute on a compromise basis where it is in the best interest of the state.
Effect of Digitalization Effectiveness on Turnover Tax Compliance among Textile Small and Medium Size Enterprises in Eastleigh, Nairobi County
(KeSRA/Moi Unpublished Research Project, 2022-11) Abdi, Ahmed Mohamed
Taxes are an important way for both developed and developing economies to raise money for government projects that help them grow. The main purpose of this study was to determine the effect of digitalization effectiveness on turnover tax compliance among small and medium size enterprises in Eastleigh, Nairobi County. The specific objectives that guided the research were: to study the relationship between technological ease of use and turnover tax compliance; to establish the relationship between technology usefulness and turnover tax compliance and to examine the relationship between system security mechanism and turnover tax compliance among small and medium size textile enterprises. This study was grounded on Technology Acceptance Model and Unified theory of Acceptance and use of Technology. Explanatory research design was applied in this study. The target population was textile enterprises operating in Eastleigh. Stratified sampling technique was utilized since the population itself was stratified in nature. Yamane's (1973) formula was used to determine the sample size of 243 textile SMEs. Data was collected using questionnaires and analyzed descriptively. To establish the relationship between study variables correlations and regression analyses were carried out. The study showed that regression coefficient (β = .098, t (171) = 1.343, p>.05) for technological ease of use, implying that a single unit improvement in technological ease of use improves turnover tax compliance by 9.8%. However, this was found to be insignificant (P=0.181>0.05). On the other hand, regression coefficient for technology usefulness was (β = .311, t (171) = 0.002, p<.05); implying that technology usefulness accounts for 31.1% of the variance in turnover tax compliance. This was found to be significant and thus, affirms that technology usefulness have a significant relationship with turnover tax compliance among small and medium size textile enterprises in Eastleigh, (P=0.002<0.05). On system security mechanism, the regression coefficient showed (β = .129, t (171) = 0.151, p>.05), implying that a single unit system security mechanism improves turnover tax compliance by 12.9%. However, this was found to be insignificant (P=0.151>0.05).The study concludes that technology had removed the effort for users to become compliant and they were open to accept new technology that would enable them become compliant. This study recommends that KRA need to ensure that their digital systems are easy to use and useful to taxpayers. KRA also need to ensure that their online system is reliable, functional and effective. This may increase the efficiency and convenience of filing taxes which may lead to positive experience and attitude that would facilitate compliance.
Effect of Digitilization on Value Added Tax Compliance among Small and Medium Enterprises in Embakasi Central Subcounty, Nairobi County, Kenya
(KeSRA/Moi Unpublished Research Project, 2022) Apollo, Cleveland Ochieng
Technological advancement is a key driver that builds efficiency in organizational processes as it offers cost cutting opportunities. The spread of digital services through capabilities of the internet and Information and Communication Technology has created an opportunity to save on costs of transactions. The motivation of this research lied in the contrasting result and the need to document the Kenyan case in respect to digitalization of a tax system and its effect on tax compliance. Hence, the general objective was to investigate the effect of digitalization on value added tax compliance among Small and Medium Enterprises in Embakasi Central Sub-County, Kenya. The specific objectives were: To establish the effect of online filing procedure on Value Added Tax compliance in Kenya, to determine the effect of use of electronic tax registers on Value Added Tax compliance in Kenya, investigate the effect of digital payment systems on Value Added Tax compliance in Kenya and to determine the effect of Value Added Tax automated assessment system on Value Added Tax compliance among small and medium enterprises in Embakasi Central Sub-County. The study was anchored on these theories: Innovation Diffusion Theory, Technology Acceptance Theory and the Economic Deterrence Theory. This study used explanatory research design. The population of this study was 190 VAT registered taxpayers at Embakasi Central Sub County and sample size of 129 VAT taxpayers. In this study, primary data was obtained through issuance of a questionnaire. To elucidate on interdependence of variables, descriptive and inferential statistics were undertaken. The study findings indicated that online filing, electronic tax registers, digital payment systems, VAT automated assessment systems signficantly affects value added tax compliance with evidence of beta and ρ values of (β1) of 0.286, ρ<0.001 for online filing, while electronic tax register had a beta coefficient (β2) of 0.329, ρ<0.000, digital payment systems had a beta coefficient (β3) of 0.311, ρ<0.000. Lastly, VAT automated assessment had a beta coefficient (β4) of 0.296, ρ<0.000. The study results concludes that online filing, electronic tax registers, digital payment systems, VAT automated assessment systems had influence on VAT compliance. In light of the statistical results and conclusions, it is recommended that digitalization components can be further enhanced to achieve higher levels of VAT compliance. KRA should revamp digitalization to improve capabilities such as widening digital payment systems to include online cheques remittance, real time ETRs and improve the VAT automated assessment systems. More studies may be done in this area to offer more insights on other factors such as Taxpayer behavioral tendencies on tax revenue performance.
Effect of Excisable Goods Management System on Excise Tax Revenue Collection in the Coast Region of Kenya
(KeSRA_Moi University, 2022) Habel Sulubu Mbaru
The Coast Region has estimated that KRA loses 4.7 litres for every five-litre bottle to the unscrupulous dealers, excise stamps are swapped. It was in the background of this statement that researcher sought to establish the effect of the excisable goods management system on the excise tax revenue collection in the Coast Region. The specific objectives of the study was to determine the effect of product marking, tracking and tracing, and product authenticity on excise tax revenue collection in the Coast Region. To provide the basis of the study, the theory of reasoned action, technological determinism theory and dynamic capabilities theories was be used. The research used explanatory research design. Data collected was primary data sources using structured questionnaires. The target population of the study consisted of 838 participants involved with the EGMS. The sample size of 271 participants was determined using a scientific formula based on stratified and random sampling technique. The study employed descriptive and inferential statistics for data analysis. The hypotheses were tested using multiple linear regression models. The results revealed that Product Marking (β1=0.127, p<0.05), excisable goods tracing and tracking (β2=0.218, p<0.05) and Product authenticity (β3=0.173, p<0.05) significantly and positively influence excise tax collection. The study concluded that product marking, tracing and tracking, and product authenticity matters in excise revenue collection in the Coast region. The implication to policy formulation is that there is need to improve on product marking by ensuring that they work in collaboration with manufacturers of these products on the adoption of latest tracking gadgets that cannot be easily tampered with. This will prevent the tax evasion by the various manufacturers especially bottling companies in the region. The research suggested that future studies be conducted through longitudinal studies to determine the success of the system on revenue collection over time.The analysis indicated that independent variables could only explain 84% of the revenue collection on the excisable goods, which implied there were additional factors which could explain revenue collection; hence future studies should identify these factors.
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.