4.2019

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Factors affecting Income Tax compliance among Small Scale manufacturing firms in Nairobi County, Kenya : Study of manufacturing firms in Kariobangi Light Industry
(KESRA/JKUAT - Unpublished research project, 2019) Wamuyu, Alice Wanjiru
The challenge facing revenue administration was to ensure that the taxpayers - pay the correct amounts of taxes, and that they do it at the correct time. Achieving full tax compliance is the ultimate goal of any revenue administration. However, the practice of tax evasion still presents a serious threat to achieving this goal, and it continues to directly deny the Government its rightful revenue. Therefore, this study sought to examine the factors affecting income tax compliance among the small scale manufacturing firms. The specific objectives of this study was in identifying the effect of filing procedures, auditing services, record keeping techniques and compliance cost on income tax compliance. The methodology of the study constituted descriptive research design. The population of the study were accounting representatives from the 55 registered light manufacturing firms at Kariobangi light industry. The sampling technique convenience sampling design. During data collection, questionnaires were used. In the analysis quantitative techniques which entailed deriving descriptive data aided by SPSS. The percentage ratings and frequencies were presented on tables and figures such as bar graphs. From the findings it was established that filing procedures were tedious and therefore, did not provide good opportunities for traders to follow up with tax compliance. However, despite the challenges on filing procedures, some traders indicated that they do still seek assistance from other professional service providers who guides them through the process. Traders indicated that auditing services was quite an expensive affair. This was an indication that those who were able to afford the services were able to meet the requirements from the KRA regarding tax remittance and compliance. The study recommends that there is need for the management at KRA to ensure that filing procedures are simplified. The tax filing procedures should be simplified to the extent that even the least learned traders are able to operate the services without seeking professional services from external consultants.
Factors influencing utilization of Electronic Tax Register by Small Medium Enterprises in Nairobi Central Business District
(KESRA/JKUAT - Unpublished research project, 2019) Ochieng, Beryl Adhiambo
In Kenya, benefits of automation include a reduction of fraud, remote access to information, improved collection statistics, and uniform application of tax legislation. However, use of ETR in processing tax returns has been met with mixed reactions, resistance and perceptions while KRA believes it has increased efficiency in operations and revenue collection. In view of this, the primary goal of this study was to analyse the factors influencing utilization of electronic tax register by Small Medium Enterprises in Nairobi CBD. The study was guided by the following specific objectives: to establish the effect of knowledge of electronic tax system operation on its utilization by Small Medium Enterprises, to determine the effect of cost incurred on the utilization of electronic tax register by Small Medium Enterprises, and to establish the extent to which user perceptions affects utilization of electronic tax register by Small Medium Enterprises. This study was guided by the systems theory, technology determinism theory and the ability to pay theory managers/owners. The study adopted descriptive research design. The study population was 7,719 SMEs in Nairobi. Simple random sampling technique was used to select the sample. The sample size of this study was based on Yamane„s 1967 formulae to get a sample of 380 respondents. This study used primary data that was collected through questionnaires. To determine the reliability of research instruments a pilot study was conducted before the actual data collection and further split half method was carried out to calculate Cronbach alpha. A value of above 0.7 confirmed the reliability of the research instruments. The data was analyzed using both inferential (multiple regression and correlation) and descriptive statistics (frequencies, percentages, mean and standard deviation) and was presented by use of tables. The study findings indicated that knowledge of electronic tax system operation (β = 0.103; ρ < 0.05), cost incurred (β = 0.393; ρ < 0.05) and user perceptions (β = 0.328; ρ < 0.05) had significant relationship with utilization of electronic tax register by Small Medium Enterprises. Therefore, it is recommended that the government should ensure proper training of entrepreneurs on the utilization of ETR machines, small and medium sized enterprises within the VAT threshold use ETRs in their operations, review the compliance costs to ensure more SMEs access VAT tax services, provide free and cheaper ETRs to SMEs. Lastly, there should be regular SME training and capacity building on ETR technical skills, systems and processes
Factors affecting withholding value added tax compliance among small and medium enterprises in industrial area, Nairobi County
(KESRA/JKUAT - Unpublished research project, 2019) Wafula, Wallace Nyongesa
The major issue facing Kenya Revenue Authority is that it has never been easy to convince all taxpayers to comply with the regulations of the tax system. Nairobi County plays host to a sizeable amount of businesses that make up a significant quantity of the county’s robust economy. SMEs are continuously expanding and have the potential to increase the revenue flows but which have been otherwise left out of the tax bracket. Studies show that millions in taxes have been lost because tax evasion issue under SMEs has not been adequately addressed. As such, it emerged key enough for KRA to revert to the drawing board, reevaluate its VAT taxation mechanisms and device new approaches on how to carry out the reforms with one of them being withholding VAT with the sole aim of increasing the revenue collected from the business within Kenya. However, despite increase in revenue collection, withholding VAT has not been meeting its revenue targets over the last few years. This study was aimed at investigating the factors affecting Withholding VAT compliance among Small and Medium enterprises in Industrial area, Nairobi County The study was be guided by the following specific objectives: - to find out how taxpayer’s knowledge management affects withholding VAT compliance, determine how cost of compliance affect Withholding VAT compliance and how tax compliance measures influence withholding VAT compliance. The main theories that will control this study are Economic (Deterrent) model and Social Influences Theory. The target population was active withholding VAT agents in Industrial area, Nairobi County. Random sampling was employed to arrive at a sample size of 60 respondents. The research design used in this study was explanatory study design. Primary data was collected through interviews by use of questionnaires with closed ended questions geared at Likert Scale. Data was coded for processing and SPSS used for data analysis to produce both descriptive and inferential statistics. Regression model was used for establishing the relationship between the study variables. The analysis of variance (Anova) was used on the average figures for all the measures of performance. The key findings of the study were that: knowledge management on taxpayers is essential for withholding VAT compliance, compliance costs deterred taxpayers from being withholding VAT compliant and enforcement measure compelled taxpayers to be withholding VAT compliant. The researcher recommends that regular tax trainings and adequate and simplified information should be provided on KRA website and other social platforms. KRA should respond promptly on issues of concern raised by taxpayers. And that KRA to offer comprehensive trainings in institutions to make taxpayers competent enough to cut down on costs of employing the services of tax experts and also training of staff .Regulatory bodies should consider controlling the amount of fee charged by tax experts. The fact that penalties on late filings and payments are already in place, they should be maintained at a considerable rate that is bearable by taxpayers. Regular audits and compliance should also be conducted by KRA to improve compliance levels. The researcher proposes quarterly audit checks
The effect of taxpayer knowledge of excise tax laws on tax compliance: The case of water bottling companies in Nairobi County
(KESRA/JKUAT - Unpublished research project, 2019) Kiogora, Vivian
Excise duty refers to tax charged on given products and services made locally or imported, on fluctuating rates indicated in the Excise Duty Act 2015. In Kenya, it is charged in both given rate where a particular measure of expense is charged per unit of measure on an excisable item, and promotion valorem rate where a rate of duty is charged on the estimation of an excisable item. Compliance of tax is characterized as how much the taxpaying network meets the tax commitment as set out in the fitting legitimate and administrative arrangements (Maxwell, 2003). He includes that agreeable tax make auspicious, appropriate and exact statement to the expense authority and intentionally settle all the due duty liabilities. Tax payer consistence relies upon financial impetuses installed in the assessment structure and the adequacy in distinguishing and punishing resistance. At the edge, individuals participate in tax avoidance when the normal advantages (lower charges) are equivalent to the normal costs. Despite excise duty contributing a lot to the revenue collection compliance to the excise tax laws has been very challenging. Thus, 11 the main objective of the study was to determine the effects of taxpayers’ knowledge on the level of Excise duty compliance among the water bottling companies in Nairobi County. The study employed a descriptive research design. Descriptive approach was integrated with survey design so as to collect comprehensive qualitative and quantitative data that enriches the outcome of the study. The study targeted all the water bottling companies in the Nairobi County as the population of the study. Nairobi County is composed of 17 sub counties and an estimated number of 120 water bottling companies (KRA, 2018). The study collected primary data. Questionnaires were used with close-ended questions for qualitative and quantitative data respectively. Analysis was done using the SPSS software. The study adopted regression analysis to confirm the effect of tax knowledge of excise tax laws on tax compliance. The study concluded that the electronic media education in Nairobi County include television, radio and social media. This had been used to inform the tax payers of the excise tax laws on tax compliance. The findings led to conclusion that print media education improved tax compliance. Print media education informed the tax payers of the excise tax laws on tax compliance. This had increased tax compliance and provided greater knowledge among tax payers. From the findings, it can be concluded that KRA does not do regular stakeholders sensitization. The respondents had poor knowledge of excise tax laws on tax compliance.
Effect of tax audit on tax compliance among large taxpayers in Kenya
(KESRA/JKUAT - Unpublished research project, 2019) Kimani, Florence Wambui
Tax audit is important because it assist the government in collecting appropriate tax revenue necessary for budget, to ensure strict compliance with tax laws by tax payers and to improve the degree of voluntary compliance by tax payers and to ensure that the amount due is collected and remitted to government. The general objective of the study was to investigate the effect of tax audit on tax compliance of companies in Kenya. The specific objectives of the study was to examine the effect of desk tax audit on tax compliance among large tax payers in Kenya; to determine the impact of field tax audit on tax compliance among large tax payers in Kenya; and to find out the impact of a mix of desk and field tax audit on tax compliance among large tax payers in Kenya. The study adopted descriptive research design. The population for the research was all staff working in tax audits and taxation of large taxpayers in Kenya. The target population of the study will therefore be 263 staff working in customs, domestic tax department and corporate support services departments in Kenya Revenue Authority. The study used stratified random sampling was used to select 158 individuals from the target population. The study used primary data, which was collected by use of structured questionnaires. A pilot test was conducted to examine and enhance the validity and reliability of the research instrument. The close-ended questions provide quantitative data whose analysis was done with the help of statistical package for social sciences (SPSS version 22). Descriptive statistics that will be used include standard deviation, mean, percentages and frequency distribution. For ease of comparison, graphs and tables was used to present the results. Regression model and correlation analysis was used to deduce the association between the variables of study. The study found that desk tax audit has a positive and significant effect on tax compliance among the large tax payers in Kenya. The study also found that field tax audit has a positive and significant effect on tax compliance among large tax payers in Kenya. The study also established that a mix of both desk and field tax has a positive and significant effect on tax compliance among large tax payers in Kenya. The study concludes that desk tax audit had the most significant effect on tax compliance among the large tax payers in Kenya, followed by field tax audit and a mix of desk and field tax audit. The study recommends an increase in the utilization of desk tax audit in Kenya Revenue Authority to improve tax compliance. This can be done by increasing the number of staff and improving training for the staff conducting desk tax audit. In addition, the management of Kenya Revenue Authority should enhance the use of field tax audit by providing the required resources including transport and computers to enable staff to go for field visits. Further, Kenya Revenue Authority should enhance the mix of desk and field tax audit so as to improve tax compliance. The use mix of desk and field tax audit helps in complementing the advantages of each.
Determinants of income tax compliance among micro and small enterprises in kenya: a survey of Ngara market in Nairobi
(KESRA/JKUAT - Unpublished research project, 2019) Zau, Florence Manga
Taxes are an involuntary charge levied by the government on individual income, business profits and on transactions of goods and services. The purpose of the study was to analyze determinants of income tax compliance on MSEs. The main issue faced by tax authorities is that it has never been easy to persuade all taxpayers to comply with the regulations of the tax systems. Micro and Small enterprises are the majority of businesses in Kenya yet taxes collected from this sector are considerably low. In Kenya, the biggest block of taxpayers on the business sector are the Micro and Small Enterprises (MSEs) who according to IMF are 80 percent of taxpayers but remit only 5-10 percent of revenue. Their compliance rate is poor as most of the businesses are not registered and hence not paying taxes. This study aimed at assessing the tax compliance by MSE’s in the Ngara market of Nairobi Region. The study used a descriptive research design and owing to the large population a sample size of 150 traders was drawn from the target population of around 1500 traders. To ensure that various diverse categories of taxpayers and business entities were included in the survey, stratified sampling technique was adopted. Data was collected using structured questionnaires with both closed and open ended questions and analyzed using both descriptive and inferential statistics. The study determined that tax rate had a negative but statistically insignificant effect on the income tax compliance among MSEs in Ngara market of Nairobi Kenya. The study also established that knowledge of tax, interest and penalties, technology have a positive and statistically significant effect on income tax compliance among MSEs in Ngara market of Nairobi Kenya.
Effect of itax system on revenue collection among small and medium enterprises in Central Business Development
(KESRA/JKUAT - Unpublished research project, 2019) Ndumia, Edwin
The study aim to the general objective of this study was to find out the effect iTax system on revenue collection among SMEs in Central Business Development, Nairobi County. The study was guided by the following specific objectives: to determine the effect of E-registration on revenue collection among SMES in CBD, Nairobi County, establish the effect of E- filing on revenue collection among SMEs in Central Business Development, Nairobi County, assess the influence of E-payment on revenue collection among SMEs in Central Business Development, Nairobi County. The study adopted descriptive research design. The study target population was 1400 Small and Medium taxpayers in CBD Nairobi County. The study sample size was 140. This study used primary data collected through questionnaires. A pre-test on a different sample was carried out to give a Cronbach‘s alpha greater than 0.7 for all the variables as a rule of thumb. Data analysis was done by use of descriptive statistics and inferential statistics using Standard statistical techniques including Pearson correlation coefficient and regression analysis employed in the analysis. All the analysis was done using the statistical package for social sciences (SPSS Version.24). Analysis of variance (ANOVA) used to establish if there is a statistical significance between the observed and expected values with the Pearson Chi square giving the degree significance of the relations, hence establishing the hypotheses. The study found that e-registration, e-filling and e-payment significantly influences revenue collection. Based on study finding, this study recommends there is need for effective cost management when administering automation tax processes.
Factors affecting rental income tax compliance in Kenya: a case of Ongata Rongai town of Kajiado County
(KESRA/JKUAT - Unpublished research project, 2019) Munyalo, Wycliffe Kyenze
The purpose of this study was to determine the factors affecting rental income tax compliance among landlords and which if addressed would enhance compliance. The theories of optimal taxation, the classical taxation theory and Keynesian Taxation Theory premised the study. Descriptive research design was adopted with a focus on both qualitative characteristics and rental income tax compliance status. The target population was 635 landlords in Ongata Rongai Town of Kajiado County. A sample of 100 respondents (16%) was selected using convenience sampling technique and interviewed based on a semi- structured questionnaire. The data collected was analyzed using both quantitative techniques with the aid of the SPSS package. The report is presented in terms of pie charts, bar charts and tables. The analysis found that the perception of fairness is likely to influence personal income administration. The study found that the KRA has done great strides in enhancing the awareness of the tax compliance in the Kajiado County. The study concluded that tax knowledge & awareness is a key predictor of tax compliance among Landowners. The study suggests the need for KRA to simplify tax compliance procedures. The study further recommended the need for re-introduction of progressive taxation that includes tax exemption.
Influence of withholding value added tax knowledge on tax compliance in Kenya: a case of Nairobi County
(KESRA/JKUAT - Unpublished research project, 2019) Waweru, Esther Wanjiru
Much of the literature has focused on withholding VAT and how its influences compliance but failed to establish the role played by VAT withholding knowledge on compliance. There is currently unresolved debate with two views on whether knowledge of withholding VAT would increase or decrease tax compliance among the tax payers. Kenya is rated among countries with low rate of tax compliance around the world. The low rate of compliance has largely been evidenced by failure of the Kenya Revenue Authority to meet revenue collection targets. The main objective of the study was to establish the influence of withholding value added tax knowledge on tax compliance in Nairobi City County. The study was guided by the following specific objectives; to explore the influence of knowledge of submission of withholding VAT returns on Tax Compliance in Nairobi County, to understand how knowledge of refund of excess credit influences Tax Compliance in Nairobi County and to underline the effect of knowledge of the penalties & interests under withholding VAT system on Tax Compliance in Nairobi County. The study adopted a descriptive research design. The population of the study comprised of 1850 VAT withholding tax agents. The study used stratified random sampling technique where 328 respondents formed the sample size. Primary data was gathered with the help of questionnaires. The collected data was entered into Statistical Package for Social Sciences for analysis. Descriptive statistics like means and standard deviations and inferential statistics like regression analysis were used in analysis. The findings were presented in form of tables and figures. The study established that knowledge of penalties and interest under withholding VAT, knowledge of refund of excess credit and knowledge of submission of withholding VAT all have postive and significant effect on tax compliance. The study concludes that withholding VAT knowledge has postive and significant effect on tax compliance. The study recommends that the Kenya Revenue Authority should put in place education programs that aim at increasing knowledge of submission of withholding VAT returns which may result into increased compliance. More SMEs should get registered for the purpose of VAT so that they gain from excess credit that is refunded by the Kenya Revenue Authority. KRA should create more awareness of the interests and penalties that may accrue to tax payers for failing to withhold VAT or pay the withheld amount.
Factors influencing tax compliance among small and medium enterprises in kisumu city
(KESRA/JKUAT - Unpublished research project, 2019) Ochiel, Cleopa
This research aimed to define the factors influencing Kenya's tax compliance, particularly focusing on small and medium-sized enterprises in Kisumu City. The factors of this study were the tax rate, the accessibility of tax data and the SME sector's cost of compliance with taxes. The concepts that guided the research were: Ability to Pay Theorem, Gunter Schmolders' sophisticated tax morale theory, and Marc Fleurbaey and Martin Feldstein's The Optimal Taxation Theory. A descriptive technique of study was adopted. The study targeted 451 SMEs out of which 211 of them were sampled. Using a self-administered questionnaire, data was gathered. Consequently, the information gathered was evaluated using statistical method and the study results displayed using graphs and tables. It was anticipated that the research finding would show the factors that affect tax compliance in the informal sector and provide suggestions on how to enhance tax compliance in the industry. The study found out that tax rates, availability of tax information and the costs incurred by the informal sector to be compliant have a postive and significant effect on tax compliance. The study concludes that ax rates, availability of tax information and the costs incurred by the informal sector to be compliant have an effect on tax compliance. The study recommends that KRA should consider reducing the tax rates while widening the tax base so as to increase compliance among the tax payers. KRA should create more awareness among the tax payers as it regards the need to file tax returns and pay taxes. KRA should put in place efforts to simplify the whole process of tax administration.
Determinants of tax compliance by public transport savings and credit cooperative societies in Kenya:
(KESRA/JKUAT - Unpublished research project, 2019) Muraya, Lilian Wakarima
Tax is the main source of revenue in Kenya. Money incurred from taxation is used to provide public services and goods to the citizens. Indeed, taxation in the informal business sector including SMEs and public transport continue to face serious issues. This research project is aimed at studying the determinants of tax compliance by public transport savings and credit cooperative societies in Kenya. A cross sectional descriptive research design was agreed and population was made of 37 public transport Sacco’s in Nyeri County hence a census of the 37 office administrators of the public transport SACCO’s in Nyeri town was pursued and a questionnaire used for data collection. The questionnaires were administered to the office administrators by the researcher and there after collected after one week. The collected data was summarized using descriptive statistical tools comprising the mean and frequencies and the binary logistic regression used to examine the association between the tax compliance determinants and tax compliance by public transport SACCO’s. The study revealed that deterrence sanctions positively (B = 0.354) and significantly (P-value 0.001<0.05) affected public transport SACCOs tax compliance while taxpayers’ perception positively (B = 0.525) and insignificantly (P-value 0.503>0.05) affected public transport SACCOs in Nyeri County tax compliance. The study also revealed that tax knowledge had significantly (P-value 0.001<0.05) and positively (B = 1.016) affected tax compliance by public transport SACCOs in Nyeri County. Finally, the findings show a negative (B = -1.213) and significant (P-value 0.001<0.05) relationship between tax compliance costs and tax compliance by public transport SACCOs in Nyeri County. The multiple logistic regression results established that deterrence sanctions had a positive (B = 0.438) and significant (P value = 0.001<0.05) effect on tax compliance by public transport SACCOs while taxpayers’ perception had a positive (B = 0.348) but an insignificant (P value = 0.660>0.05) relationship with tax compliance by public transport SACCOs. The study also revealed that tax knowledge had a significant (P value = 0.009<0.05) and positive (B=1.464) effect on tax compliance by public transport SACCOs. The results further established a negative (B=-1.524) and significant (P value = 0.004<0.05) relationship between tax compliance costs and tax compliance by public transport SACCOs in Nyeri County. The results led to the conclusion that noncompliance sanctions, knowledge in taxation and costs associated with compliance mostly affected tax compliance by public transport SACCOs in Nyeri County. The study suggested that severe fines and penalties should be imposed on non-complaint public transport SACCOs and frequent tax audits should be carried out by the Kenyan tax authority. The study also suggest that KRA should ensure transparency and accountability during collection of taxes and that KRA should carry out tax training programs among public transport SACCOs to enhance tax knowledge and awareness as this would motivate SACCOs pay taxes and file tax returns.
Factors affecting the uptake of tax amnesty by real estate owners in Mombasa, Kenya
(KESRA/JKUAT - Unpublished research project, 2019) Wanjohi, Charles Muchiri ; Mumia Benn MINCU, CPA.K
Globally people tend to have a negative perspective towards payment of tax. This means that the government at times if not all times does not collect what is due to it because of noncompliance. Kenya revenue authority and various county governments have offered tax amnesty to defaulters. Despite all these efforts by the government to entice defaulters, the uptake of tax amnesty has been low. The study thus aims at analyzing the factors affecting the uptake of tax amnesty by real estate owners in Mombasa, Kenya. The objectives of the study are to investigate whether enforcement, taxpayer education and politics has an effect in the uptake of tax amnesty among real estate owners in Mombasa, Kenya. This research project adopted a descriptive research design. The study is based on the Kenya revenue authority officers and management in Mombasa Southern region. The target population for this study was the real estate owners in Mombasa region whose tax compliance was under review by the Kenya Revenue Authority. The population was 1240 real estate owners according to Kenya Revenue Authority Report (2017) report. Stratified random sampling method was used to select relevant respondents from the real estate owners in Mombasa region whose tax compliance was under review by the Kenya Revenue Authority. The researcher used the drop and pick method whereby the questionnaires were given out to the respondents for them to fill out. The researcher then collected them at a later time for data analysis. The collected data was analyzed quantitatively. Descriptive and inferential statistics were done using SPSS version 25. The results were presented in table forms for ease of comparison and understanding. From the model summary it is clear that the adjusted R2 was 0.908, explaining 90.8% of the variance of the independent variable (Enforcement of tax amnesty, Taxpayer Education, and Politics) indicating that; Enforcement of tax amnesty, Taxpayer Education, and Politics have significant effect on uptake of tax amnesty by real estate owners in Mombasa. Thus factors not studied in the research contribute 9.2% of uptake of tax amnesty by real estate owners in Mombasa. The P- value of 0.000 (Less than 0.05) implies that the model of project on tax amnesty uptake on real estate in Mombasa, Kenya is significant at the 95% confidence level. The researcher concluded that inadequacy in enforcement of tax amnesty, lack of tax payer education on tax amnesty and low frequency of tax amnesty negatively affected uptake of tax amnesty by real estate owners in Mombasa. The study thus recommends that KRA should revamp the enforcement department and transform law enforcement to be more tax payer friendly. Consultants should also be sensitized on tax amnesty matters to empower them, give proper advice to tax payers. Also, the mode of disseminating information about amnesty should be well thought out to have a wide coverage so as to reach majority of tax payers. KRA officers should also have a positive attitude towards amnesty and should be alert to facilitate tax payers. Finally, since most tax payers are reluctant to comply due to frequent amnesty, the authority should reduce the number of amnesty offered in a particular period.
Effect of information technology on tax compliance by Kenya Revenue Authority in Nairobi, Kenya
(KESRA/JKUAT - Unpublished research project, 2019) Olonde, Jeconia Omondi
The Kenyan government has had budgetary shortfall to finance both its capital and recurrent expenditure. With the big projects initiated by the government, it has forced the government to borrow externally. Since tax is the largest source of revenue for the government, the Kenya Revenue Authority has a huge challenge to increase its revenue collection. One of the reason for revenue collection shortfall by Kenya Revenue Authority can be attributed to low tax compliance and therefore the tax collector has been looking at ways to increase tax compliance of taxpayers. This has led to KRA to implement information technology so as to improve tax compliance. One of the information technology implemented is iTax, and others that KRA plans to implement is big data analytics and block chain technology. With the technology aspects being implemented or being in plan of implementation, the study sought to determine the effect of information technology by Kenya Revenue Authority on tax compliance in Nairobi, Kenya, and more so, the effect of iTax on tax compliance; the effect of big data analytics on tax compliance; and the effect of block chain technology on tax compliance. With the research objectives, the study analysed the theoretical and empirical literature, with the theories used being diffusion of innovations theory, technology acceptance model, and united theory of acceptance and use of technology. The concepts around the information technology were analysed and empirical research done to analyse the outcome and was used to compare with the findings. The study formulated a conceptual framework which operationalized the variables based on the technology acceptance model. The study also identified the gaps in the empirical research and how it will fill the gaps. The study employed a descriptive survey research design to get the good description of the phenomenon under study. The target population was all the I.T staff at the Kenya Revenue Authority who are based at The Times Towers who were 65 in number. Purposive sampling technique was used to identify respondents and they were 46 so as to be adequately representative. A questionnaire was the tool for data collection and was sent to the respondents through email. The data was thereafter analysed using descriptive statistics which include means and standard deviation, and inferential statistics which was regression analysis. The study findings indicated that in general, information technology has an effect on tax compliance i.e taxpayers’ registration, filing of returns, and income declaration. The study also found that iTax system has an effect on tax compliance to a very great extent and also well accepted by users, while data analytics and block chain technology have an effect on tax compliance to a great extent and also the acceptance of the technologies are well accepted. Regression analysis indicated that iTax system and big data analytics had significant effect on tax compliance while block chain technology had no significant effect on tax compliance. The study recommended that proper training needs to be done on new information technologies and also implement change management so as they can be effective. It also recommended that the government needs to create favourable policies to enable data privacy for users.
The impact of system automation on revenue collection in Kenya revenue authority, Nairobi region : a case study of Kenya Revenue Authority
(KESRA/JKUAT - Unpublished research project, 2019) Chebon, Phoebe Chemosop
Actual revenues and expected revenue always differ with large gap margin resulting in lower than expected revenue collection. While the total tax receipts may be lower compared to full compliance, it may not be lower than under other feasible taxation system. iTax is a modern computer-based assessment and collection software used by the government. It is a computing and accounting system for state revenues which stores all relevant (credit and debit) data in individual accounts in a data base, and thus helps monitor and control all tax transactions. iTax provides a convenient and efficient way to improve revenue collection, transparency in fiscal administration and management of local and national tax authorities. It is important to understand iTax system and its influence on revenue collection. The study therefore aims to establish the effect of system automation on revenue collection in Kenya Revenue Authority, Nairobi Region. The study was guided by the following specific objectives: - to investigate the effect of e-payment on revenue collection in Kenya Revenue Authority, to find out the effect of e-registration on revenue collection in Kenya Revenue Authority and to determine the effect of e-filing on revenue collection in Kenya Revenue Authority. The study adopted descriptive research design. The study target population was 320 Kenya Revenue Authority employees in Nairobi Region. The study sample size was 100. This study used primary data collected through questionnaires. A pre-test on a different sample will be carried out to give a Cronbach ‘s alpha greater than 0.7 for all the variables as a rule of thumb. Data analysis was used by use of descriptive statistics and inferential statistics using Standard statistical techniques including Pearson correlation coefficient and regression analysis was employed in the analysis. All the analysis was done using the statistical package for social sciences (SPSS Version.24). The study found that there are challenges when trying to use iTax system. The study recommends that KRA should find a way of training users on how to use the system and overcome the challenges of iTax system.
Effect of tax system automation on value added tax compliance among small and medium enterprises in Kisumu county, Kenya
(KESRA/JKUAT - Unpublished research project, 2019) Mackenzie, Irene Mwongeli
VAT compliance has remained a contingent issue among the developed and developing countries around the world. Unlike developed economies, failure to comply with taxes is more evident among developing and other emerging economies. Kenya is one of the developing. The study sought to establish the effect of tax system automation on value added tax compliance among small and medium enterprises in Kisumu County. Specifically, the study focused on electronic tax payer registration system, electronic filing and electronic payment system and their influence ion VAT compliance. The study was supported by two theories namely technology acceptance model theory and the Allingham and Sandmo (AS) theory. The design adopted in the study was descriptive. A total of 451 SMEs operating in Kisumu City were targeted. The study used stratified random sampling to sample out 221 SMEs. Primary data was collected using questionnaires. The analysis of the collected data was done using descriptive and inferential statistics. The study established that electronic tax payer registration, electronic filling and electronic payment all positively and significantly influence VAT compliance. The study concludes that tax system automation has positive and significant effect on VAT compliance. The study recommends that KRA should consider integrating the i-tax with the tax payer registration, filing and payment system so that these activities can be carried out simultaneously.
Effect of taxpayer facilitation on value added tax compliance: a case of small and medium scale traders in Nairobi’s central business district
(KESRA/JKUAT - Unpublished research project, 2019) Genevieve, Akinyi Ochar
As the main source of revenue for governments worldwide, the effectiveness and efficiency of tax collection cannot be gainsaid. However, studies indicate that tax non-compliance is a perennial problem in majority of the countries in the world. The private sector significantly contributes to the Kenyan economy by offering employment to very many people and through tax remittances to the government. Yet, the SMEs which dominate the private sector face numerous tax non-compliance issues. The main objective of this study was to examine effect of taxpayer facilitation on value added tax compliance by small and medium scale traders in Nairobi’s Central Business District. The study was guided by Deterrence theory of taxation and the fiscal exchange theory. The study adopted a descriptive survey design. The sample size was 40 small medium scale traders in Nairobi central business district along Luthuli Avenue. The response rate was 78%. Both primary and secondary data was used where questionnaires were employed to collect primary data while secondary data was obtained from KRA website and other academic materials. Both descriptive statistics and inferential statistics were carried out with the help of the SPSS software. The study established that taxpayer facilitation was very instrumental in value added tax compliance by small and medium enterprises. Based on research finding it can be concluded that customer care, taxpayer education and online filing influences value added tax compliance. The study recommends that KRA should do more taxpayer sensitization to all the taxpayers to ensure that information reach the right people. The study therefore suggested that future studies focus on other large entrepreneur and government agencies for purposes of comparison.
Effect of electronic commerce on tax collection by Kenya Revenue Authority in Mombasa County
(KESRA/JKUAT - Unpublished research project, 2019) Ayuma, Raphael Ongeri
Kenya’s economy is hanging on the balance in terms of its financial stability and economic freedom, thanks to the escalating levels of national debt exerting lots of pressure to the revenue authority to hit their revenue collection targets. The main challenge facing Kenya Revenue Authority is the efforts to persuade or rather force the taxpayers to comply with the existing tax regulations hence make them pay their due share of taxes. E-commerce sector has been growing tremendously over the years but there is no significant increase in revenue collected as most of them go unnoticed by the revenue authorities, yet they have a greater potential of generating lots of revenue. This has created many questions from the government and the relevant authorities thus the study sort to investigate effect of electronic commerce on tax collection by Kenya Revenue Authority in Mombasa County. The specific objectives guiding the study are; to evaluate the effect of business-to-business electronic commerce on tax collection by Kenya Revenue Authority in Mombasa County. To determine the effect of business to consumer electronic commerce on tax collection by Kenya Revenue Authority in Mombasa County. To assess the effect of consumer-to-consumer electronic commerce on tax collection by Kenya Revenue Authority in Mombasa County. The main theories include; ability to pay theory, cost of service theory and benefit received theory and descriptive cross-sectional study employed. The target population was 1457 Kenya Revenue Authority staff in Domestic Tax Department, as detailed in the Kenya Revenue Authority human resource records, 130 e-commerce businesses and 246 e-commerce consumers in Mombasa County as contained in the Communication Authority of Kenya database. A sample size of 94 selected using stratified random sampling and grouped into three strata consisting of Kenya Revenue Authority staff; e-commerce businesses; e-commerce consumers. Quantitative data collected using a structured questionnaire tabulated, coded and analyzed using Statistical Package for Social Sciences version 24. The significance of the regression was tested and the findings led to the conclusion that business-to-business, business to consumer, and consumer-to-consumer e-commerce positively influenced tax collection by Kenya Revenue Authority in Mombasa County. The p -values for all the variables were less than 0.05, hence statistically significant. The study recommended that investigation and subsequent improvement in the organizational policies within the revenue authority and embrace those that are in line with the new operational framework which are technology intensive. Training of revenue staff on transfer pricing issues especially the intangibles, and equip them with all methods of applying transfer pricing and application of the advanced technologies that are essential for the performance of their operations. Also simplification of legislation and provide for new ways and means of interpreting and determining the nature and characteristics of income especially from e-commerce transactions. The study made suggestion for further study on other variables such as consumer to business, business to government, and consumer to government e-commerce in Mombasa County and the other counties to draw concussive view on the study. In addition, a repetition of this study be conducted using a larger sample size, in other parts of the country and using a combination of other data-collecting instrument such as interviews and focus group discussions to help in counter checking the evidence provided.
Factors affecting automated tax systems on revenue collection among small and medium enterprises in Kenya : a case study of west of Nairobi station
(KESRA/JKUAT - Unpublished research project, 2019) Githinji, Mary N
This study aims to establish the factors effecting automated tax systems on revenue collection in Kenya. The study was guided by the following specific objectives: - to determine the effect of tax compliance costs on revenue collection in Kenya, to analyze the effect of technical skills and knowledge on revenue collection in Kenya, to assess the effect of tax rates on revenue collection in Kenya and to determine the effect of penalties and interests on revenue collection. The study adopted a descriptive Research design. The target population of 98 was drawn from West of Nairobi Tax Station. The study used primary data collected through closed structured questionnaires to meet the objectives of the study. A pre-test on a different sample was carried out to give a Cronbach’s alpha greater than 0.7 for all the variables as a rule of thumb. Data analysis used of descriptive statistics and inferential statistics was done using Standard statistical techniques including Pearson correlation coefficient and regression analysis employed in the analysis. All the analysis was carried out using the statistical package for social sciences (SPSS Version.24). Analysis of variance (ANOVA) was used to establish if there is a statistical significance between the observed and expected values with the Pearson Chi square giving the degree significance of the relations, hence establishing the hypotheses. In multivariate analysis, multiple regression analysis model was used to determine the type of the relationship that existed between independent and dependent variables. The study found that Tax compliance cost, penalties and interest and tax rate significantly influences revenue collection. Based on study finding, this study recommends there is need for effective cost management when administering tax. Reduction in cost of compliance will increase the number of registered traders which will increase revenue collection. Kenya revenue Authority should offer on a regular basis technical support to traders which will help them familiarize with tax systems in order to facilitate collection of revenue collection. Technical support will help traders reduce the transaction time in serving their clientele and transparency in service delivery.
Factors affecting electronic filing of returns among small and medium enterprises in Mombasa Central Business District
(KESRA/JKUAT - Unpublished research project, 2019-12) Kagendo, Edna
Kenya has been ranked among countries with low tax compliance as a result of inefficient and ineffective tax administration. Integrating the processes of registration and filing has been a big challenge too. Tax evasion also remains very high with a tax gap of about 35% and 33.1% in 2011 and 2012, respectively. Despite the introduction of an electronic filing system in Kenya, which had been perceived to solve these challenges similar challenges have persisted up to date. The purpose of this study was to establish factors affecting the filing of returns among small and medium enterprises in Mombasa Central Business district. The study was based on the technology adoption model, the theory of reasoned action and economic network theory. The research designs adopted in the study was cross-sectional survey research design. The population for the study was 250 small medium enterprises in Mombasa CBD. The study used clustered and probabilistic sampling procedure on the different wards in Mombasa CBD to arrive at a sample of 75 businesses which is a 30% on the population. A self-administered questionnaire was used to collect data. Collected data was analyzed through a descriptive and inferential analysis. The study found that user interface is a key component that affects filing of taxes among SMEs in Mombasa CBD including the ease of navigating through KRA Itax portal and ability to upload or download forms online, technical skills including spreadsheet use, knowledge of tax laws and usage of both hardware and software were very important during filing of taxes online among owners of SMEs in Mombasa CBD and finally training costs, internet costs, computer software, and hardware were not costly to maintain among owners of SMEs in Mombasa CBD. The study concluded that: there is strong and positive relationship between user interface and filing of taxes online of 0.324; technical skills including ability to use spreadsheets, knowledge of tax laws and usage of internet and E-mails were found positive and significant in filing of returns 0.474 and finally it was not costly to file returns online 0.0113. The study recommends KRA to make the website friendly in such a way that users of the system don’t have a difficult time filing taxes online, offering of workshops to small business across all regions in the country so that all SMEs owners are able to file taxes and Since cost was found not to be a major thing SMEs need to acquire the necessary ICT equipment including stable internet, both hardware and software as well as seek tax consultants to train their staff on filing taxes online to enhance higher compliance levels.
Effects of tax incentives on the financial performance of the manufacturing sector in Naivasha, Nakuru County, Kenya.
(KESRA/JKUAT - Unpublished research project, 2019) Gitari, Jackline Kathure
Tax assessment is the key wellspring of salary that the governing body of Kenya uses to give open items and undertakings to its masses It is thusly noteworthy for the lawmaking body to raise adequate pay through duty appraisal to meet its progression inspiration. The cutting edge worldwide viewpoint is depicted with competition for the inspiration driving attracting overall associations and this has made fiscal impulses to transform into an overall miracle. Destitution stricken African countries are needy onassessment events and selling items and administrations obligation while the Common riches countries license adventure rewards or animated crumbling. It is subsequently that the general objective of this examination was wanted to develop the effect of the tax incentives on the progressive display of manufacturing firms in Naivasha, Kenya The assessment got a hypnotizing investigation structure. The assessment used a purposive testing approach in light of the way that the amount of the gathering firms in Naivasha are only few. The supreme amounts of firms to be used in the assessment are enlisted under Kenya Association of Manufacturers. The examination will get an insights audit plan. Secondary data from the enlisted firms was accumulated on Return on Assets and advantage will be the main elements to be used in estimation of the free factors when assessing the operating organizations in Naivasha, Kenya, Nakuru County. The population to be measured comprised of all the 35 manufacturing firms in all characterizations (gigantic, medium and little) under the Kenya Association of Manufacturers list in Naivasha, Nakuru county. The examination used a sample of 8organizations. The investigation uncovered that there is 61.1% variety in authoritative execution of the assembling firms in Naivasha, Nakuru area because of changes in Corporate incentives, Zerorated Vat incentives and Capital allowance incentives. This unmistakable measurement infers that tax incentives positively affect hierarchical execution of assembling firms in Naivasha, Nakuru County.This study prescribes that treasury and KRA to make simple for such firms to that connected duty motivations to can be appreciated