5.2018

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Determinants of self-assessment system on the compliance of taxpayers in the entertainment industry in Mombasa County
(KESRA/JKUAT - Unpublished research project, 2018) Mangwana, Elly
The self-assessment system in taxation has been implemented as way of enhancing compliance of taxpayers. Several studies have captured the effect the system has on the taxpayers’ compliance in areas such as Malaysia, India, Ethiopia and Nigeria. This research therefore focuses on studying the determinants of self-assessment system in compliance of taxpayers in the entertainment industry in Mombasa County. The study, aiming to build on three theories; Economics of Crime, Expected Utility Theory and Ability to Pay Theory and Deterrence Theory was focused on achieving the following particular objectives; to find out whether obtaining tax knowledge for the self-assessment framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County; to establish whether engaging external tax professionals tax audit and investigation with regards to the self-assessment framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County; and to evaluate the record keeping practices with regards to the self-assessment framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County. The research was guided by the following questions; Does the obtaining tax knowledge for the self evaluation framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County?; to extent does engaging external tax professionals’ tax audit and investigation with regards to the self-evaluation framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County?; and do the record keeping practices with regards to the self-evaluation framework influence the compliance for the taxpayers in the entertainment industry in Mombasa County? Descriptive research design was applied. The target population was 45 establishments in Mombasa County, and due to this small number, conducting a census was found to be the appropriate. The data was collected using questionnaires and then analyzed using SPSS Version 23. The analyzed data was then presented in form of tables and figures. Study findings revealed that tax knowledge, external tax professionals and record keeping have significant effect on tax compliance in in the entertainment industry in Mombasa County with t=5.274; p=0.000, t=6.426; p=.000 and t=2.677; p=0.011 respectively and collectively with R-square value of 0.855. From the findings, the study recommends that tax knowledge is important in regards to self assessment framework on the compliance for taxpayers in the entertainment industry.
Effect of social media advertising on tax administration by the Kenya Revenue Authority
(KESRA/JKUAT - Unpublished research project, 2018) Kioko, Ivy Mutulu
Digital advertising is constantly advancing with respect to the changes in technology. Social media is one type of digital advertising and organizations have embraced these social media technologies for external communications and interaction with general public. Governments and revenue bodies have not been left behind as reported by the OECD in 2011. There is, however, little information documented regarding the use of social media advertising by revenue bodies in tax administration in Kenya. This research therefore sought to fill this gap by studying the effect of social media advertising in tax administration by Kenya Revenue Authority. The study was guided by the following questions: Does Facebook advertising have an effect on tax administration by the Kenya Revenue Authority?, Does Twitter advertising have an effect on tax administration by the Kenya Revenue Authority? And does YouTube advertising have an effect on tax administration by the Kenya Revenue Authority? The population of this study was 127 officers including itax (customer service) and marketing team from the KRA southern region, Forodha House in Mombasa town, with a sample size of 39 individuals. The pilot sample for this study constituted four individuals calculated from the sample size. The data collection instruments included questionnaires. Data collected was analysed using descriptive statistics techniques, using the SPSS version 23 software. The data analysed was presented in the form of tables, bar charts and pie charts. The findings established that there existed a positive correlation between Facebook, Twitter and YouTube advertising and administration of tax, with the coefficient of correlation being 0.652, 0.431, and 0.538respectively. The study therefore recommended that the management should capitalize on Facebook technology to communicate with its customers on matters related tax return filling; twitter advertising as a platform to send short text messages on matters related to tax returns; and encourage the taxpayers to use YouTube platform to learn how to file tax returns.
Effects of Tax Incentives in The Development of Manufacturing Industries in Nairobi, Kenya
(KESRA/JKUAT - Unpublished research project, 2018) Wangu, Munene Rosemary
This paper investigated the effects of fiscal incentives such as corporate tax incentives, capital allowance incentives, and VAT incentives on the development of the manufacturing industries in Nairobi. The study used Return on Assets (ROA) as the proxy for development. The researcher was motivated by the fact that many developing nations, like Kenya, often use fiscal incentives to attract foreign direct investment (FDI) through export processing zones (EPZ). The companies that invest in this zones often receive unique treatment and incentives for a given period of time. However, several researchers have investigated the effects of the incentives on the EPZs but not on the general manufacturing environment. Therefore, this research sort to understand if the fiscal incentives on the manufacturing sector without focusing on a specific are of production of zone. The study employed a descriptive survey research design. For data collection, the researcher employed random sampling to gather a sample of 51 respondents from an initial target sample of 80 respondents. The study used a questionnaire as the main data collection instrument. The data collected was analyzed using descriptive statistics and was regressed to give a statistical meaning to the results. The final regression equation was, ROA = 22,892,923 + 4.952 (corporate income tax incentive) + 9.344 (Capital allowance incentive) + 0.254(VAT Incentive). This showed that the various fiscal incentives all have a positive and significant effect on the development of manufacturing industries in Nairobi. The study concluded that even though these incentives are effective in stimulating development, they require other policies in order to maximize their effects on the manufacturing sector. The researcher recommended that the government should implement other policies that improve the business environment for the manufacturing sector. The government should focus on the local manufacturers and the reduction in the cost of doing business in order to maximize the effectiveness of the fiscal incentives in the economy as a whole. Keywords: Return on assets, corporate tax incentives, capital allowance incentives, VAT incentives, and export processing zones.
Effect of Itax System On Revenue Collection of Kenya Revenue Authority: A Case of Large Taxpayers
(KESRA/JKUAT - Unpublished research project, 2018) Njenga, Annrita Wanjiru
The general objective of the study was to establish the effect of iTax system on revenue collection in Kenya Revenue Authority among Large Taxpayers in order to achieve the purpose of the study and to address the statement of the problem the study is guided by the following three specific objectives. To establish the effect of the adoption of electronic registration on revenue collection by the Kenya Revenue Authority on Large Tax Payers. To establish the impact of the adoption of iTax on efficiency of operation at Kenya Revenue Authority on Large Tax Payer. To find out the challenges of iTax adoption at the Kenya revenue authority when dealing with large tax payers. The success of the KRA adoption largely depends on the functionality of the service. The study established that KRA‗s revenue collection had an impact on iTax adoption. The research adopted a descriptive research design which was the most suitable method as it enabled the researcher to analyze the effect of technology adoption on tax compliance. The population of interest of the study consisted of 1,240 large taxpayers. The sampling frame consisted of the segmented taxpayers from the large taxpayer’s office department. The researcher adopted both stratified and random sampling techniques. The sample size consisted of 124 respondents to whom questionnaires were administered. The quantitative data collected was analyzed by the use of inferential statistics using SPSS and presented through regression and correlation analysis to determine the relation between the dependent and independent variables. The information was displayed by the use of tables where necessary. Descriptive statistic such as mean, standard deviation and frequencies was used to measure the central tendencies of the variables. The study concludes that iTax adoption of large taxpayers is influenced by revenue collection and efficiency. The study recommends continued seminars and training of tax payers on filling of returns.
Factors influencing value added tax compliance in the construction firms in Kiambu county
(KESRA/JKUAT - Unpublished research project, 2018) Munyaka, Bonface Mbogo
Tax compliance is the degree to which the taxpaying community meets the tax obligations set out in the appropriate legal and regulatory provisions. The construction industry contributes approximately 4.2% to the Gross Domestic Product. The main objective of the study is to establish factors influencing Value Added Tax compliance among the construction firms in Thika District. The researcher employed a descriptive design to collect a large quantity of information about the population being studied. The study targeted all registered construction firms within Thika District. The researcher collected primary data from the sampled construction firms using self-administered questionnaires. Data collected was analyzed using Statistical Package for Social Sciences and the study findings presented in the form of tables. The results show that all the established factors have a significant influence on the Value Added Tax compliance among the construction firms. The findings revealed that tax understanding and knowledge has a significant effect on tax compliance. Better understanding of VAT laws encourages voluntary compliance. Reduced tax compliance cost is associated with high levels of tax compliance. The study findings reveal that effective imposition of fines and penalties play a vital role in improving tax compliance. The findings of the study show that taxpayer perception and attitudes has a significant effect on tax compliance. It is therefore prudent for KRA to enhance their taxpayer education activities to enable businesses have better understanding of various factors affecting tax compliance. These study findings will help KRA and the government develop interventions that will encourage voluntary tax compliance that will lead to increased revenue collection to enable the government provide goods and services to its citizens. Key Words: Tax compliance; construction industry; Value Added Tax.
Impact of Customer Service Policy Reforms On Compliance in Kenya: A Case Study of Nairobi
(KESRA/JKUAT - Unpublished research project, 2018) Wanjiku, Njihia Jackline
The aim of the study was to determine the impact of Customer Service Policy Reforms on the compliance over the years in Kenya, Nairobi County. The specific objectives were as follows; to assess the impact of the mobile service policy reform on compliance, to determine the impact of the customer satisfaction research policy reform on compliance and the to find out the impact of tax payer education on compliance. The study adopted mixed research, both qualitative and quantitative research design. The study also adopted collection of both primary and secondary data. The research instrument for this research was a questionnaire. The target population was small tax payers, medium taxpayers and large taxpayers and the sample size will be one hundred (100) individuals who were selected by the stratified method of sampling. The study analysed the data by the use of both descriptive and inferential statistics. The inferential statistics included the use multiple regression, ANOVA and correlation analysis. Data was analysed by the use of SPSS (Statistical Package for Social Sciences) Version 24. The study found that the mobile system had a positive impact on revenue collection and revealed that more should be done with regard to taxpayer education and customer satisfaction survey research policy reform.
Factors affecting rental income tax compliance among landlords in Nyeri municipality.
(KESRA/JKUAT - Unpublished research project, 2018) Kering, Beda Kipkoech
Taxation is the primary source of revenue for governments throughout the world to implement their social and political agendas and to deliver services to the citizens. The general objective of this study was to investigate factors affecting rental income tax compliance among landlords in Nyeri Municipality in Kenya. This study adopted a descriptive survey design. This study was carried out to establish factors affecting voluntary rental tax compliance among the landlords in Nyeri municipality, and the cost of compliance. The study aimed to reach out to a sample of at least 285 respondents but only 156 responded and returned the questionnaires. Primary information was gathered by use of structured questionnaires. The Kenyan landlords will understand the importance of voluntarily tax compliance and reduce noncompliance costs. This in return is going to improve the performance of the government and they will enjoy the low cost of doing business due to improved services by the government. The findings on the attitudes of the Kenya landlords towards taxation, attitude and perception that politicians misuse taxes, peers and financial and family obligation had strong positive responses. Also the landlords did not have a very healthy perception towards the revenue authority and the Government in regards to taxation matters and approach. The study recommended that the government should sensitize the tax payers on the importance of paying taxes. It is also recommended that the government ought to be transparent on how the revenue collected from taxation is being utilized and KRA need to carry out tax reforms by factoring in the views of all the taxpayers. The researcher recommends that further study be carried on the other factors that might influence the voluntary tax compliance on rental income. Again further study also need to be done on the same topic but covering a different location other than Nyeri.
Factors Influencing Turnover Tax Compliance in Kenya; Case of Embu County
(KESRA/JKUAT - Unpublished research project, 2018) Waweru, Thiong’o Arthur
Taxation is the avenue through which persons both corporate and individuals contribute towards revenues of their country or tax jurisdictions they operate in. On the other hand, taxation is the most important avenue through which governments generate revenue necessary for development projects and recurrent expenditure. The objective of this study was to find out the factors influencing turnover tax compliance in Kenya. The researcher outlined a detailed literature review and identified the variables for this research to be taxpayers level of awareness, taxpayer’s perception towards the government and tax system, and costs of compliance. A target population of 200 turnover taxpayers located in Embu town was identified. A sample of 132 taxpayers was picked as representative to be the focus of this study. A descriptive survey design was used. Stratified sampling technique was used to create a sampling frame ensuring that different and diverse types of entities were included in the survey. Data was collected using self–administered questionnaires and an interview guide. The collected data was analyzed using Statistical Package for Social Scientist software (SPSS) and findings presented using tables. The Findings from the study reveal that all the identified factors have a direct influence on the tax compliance efforts by taxpayers in the turnover businesses. The perceptions of taxpayers towards the tax system greatly determine the level of compliance for turnover tax. The findings suggest that taxpayers are not aware of their responsibilities; however, the result also indicated that other factors like cost of compliance and complicated systems result into the low levels of compliance. Taxpayer’s perception of tax system is inclined to change due to changing tax knowledge. This suggests that increased tax knowledge may have significant impact on perception of tax system. The recommendations of the study are; There should be a deeper analysis of the mode of turnover tax collection to make it less time consuming and less tedious. The problems that turnover tax taxpayers experience when filing turnover tax returns should be established and necessary adjustment remedies made. There should be rigorous education programs targeting SMEs to enable them understand the turnover tax system, how it works and advantages of using it so that they can understand and appreciate it, understand obligations and provide opportunity to provide feedback about the way the tax system was run. They should also train their staff diligently on customer service so that when these taxpayers who have limited knowledge on taxes approach them they can be able to help them and train them on the application of turnover tax.
Impact of iTax On Vat Revenue Collection in KRA: A Case of Machakos Station
(KESRA/JKUAT - Unpublished research project, 2018) Okello, Fredricke Bryan
The objective of this research study was to establish the impact of the iTax system on VAT revenue collection at KRA Machakos station. The objective of the study was answered using three research questions which revolved around online filing, online payment and online monitoring and how each is affected by the iTax system in order to enhance VAT revenue collection. The study was based on three theories that provide the theoretical background of this research study. The theory includes; technology acceptance model (TAM), Theory of Planned Behavior (TPB) and theory of reasoned action (TRA). This was followed by the review of existing empirical literature for each variable and a conceptual framework of the same. In order to come up with the research gaps, critique of existing literature as advanced by different scholars was carried out and discussed at length. A summary was then drawn from the literature review. The research problem was solved using descriptive study design. The target population for the study was DTD staff at Machakos station. The study targeted 78 employees. The Fishers model was used to select 65 respondents for the study. A four-point Likert scale structured questionnaire which covered all variables of the study was used to collect primary data. A pilot test was conducted to assess validity of the research instruments whereas Cronbach’s coefficient alpha was used to determine reliability of the research instruments. Data obtained was subjected to quantitative methods of data analysis using SPSS (version 25). Results obtained were presented using tables and graphs for ease of understanding and interpretation. In addition, both correlation and regression analyses were done and summaries presented. Both descriptive and inferential statistics were used to analyze the data. Statistical significance of relationships among selected variables was determined using multiple regression analysis. The study established that online filing, online payment and online monitoring have a significant contribution on VAT revenue collection at Machakos station. The study concluded that iTax system has an impact on VAT revenue collection in Machakos station though KRA DTD officers at Machakos station feel that taxpayers are still faced with system challenges
Effectiveness of Time Series Models On Forecasting of Value Added Tax Revenue in Kenya Revenue Authority
(KESRA/JKUAT - Unpublished research project, 2018) Kithure, Muthuri Evans
Taxation is one of the means by which governments finance their expenditure by imposing charges on citizens and corporate entities. Tax revenue forecasting plays a central role in annual budget formulation. It provides policy makers and fiscal planners with the data needed to guide borrowing, use accumulated reserves, or specify monetary measures to balance the budget. Therefore, it is necessary for a government to forecast the revenue it collects for planning purposes. Kenya Revenue Authority (KRA), is an agency of the government of Kenya that is responsible for the assessment, collection and accounting for of all revenues that are due to government, in accordance with the laws of Kenya. The main objective of this study was to fit time series models in the data series of revenue collections and establish their effectiveness as far as revenue forecasting is concerned. The study used the monthly Value Added Tax (VAT) collections data from the financial year 2009/2010 to 2015/2016 with the general objective of exploring patterns in the data such as trend, seasonal components, cycles among others and further establish a suitable forecasting model which can be used to predict the amount of VAT revenue to be collected in a certain specified period. The first step was to check if the series was stationary by using Dickey Fuller Test, thereafter transformation by differencing if the series was not stationary. The order of the models was tentatively chosen by analyzing the ACF and PACF plots of the data. This resulted to AR(3) model, MA(1) model, ARMA(3,1) model and ARIMA(3,1,1) model which were fitted to the data series. In order to select the best potential model, different statistics were used like BIC, AIC, AICc, and forecast accuracy measures like ME, MAE and MPE. ARIMA(3,1,1) was selected as the best model compared to the other models. Diagnostic check was made to test for correlation and normal distribution of the residuals using Box-Ljung test, Q-Q plots and Shapiro wilk test and the results showed normal distribution of the residuals with no correlations for all the models. Using the models, forecast of VAT revenue collection in the financial year 2016/2017 was made and the forecasted values compared with the revenue collections that were made in the respective financial year. ARIMA (3,1,1) produced better forecasted values as compared to the other models. Therefore ARIMA (3,1,1) was chosen as the best effective model to fit the data series and forecast the VAT revenue collections.
Factors affecting tax compliance in the informal sector in Nairobi; case of Nairobi central business district
(KESRA/JKUAT - Unpublished research project, 2018) Gogo, Pamella
This study sought to determine the factors affecting tax compliance in the informal sector in Nairobi. To achieve this, central business district of Nairobi was taken as a case study. In previous years’ revenue targets set by treasury are never met. Therefore, the actual revenue collected has always been behind the targets. This is as a result of tax noncompliance. Tax non-compliance may be measured in terms of the tax gap. It is very clear that there has been tax gaps every fiscal year. Therefore, the researcher opted to carry out this study to determine factors affecting tax compliance in the informal sector and recommend measures to be put in place by the government and Kenya Revenue Authority to enhance tax compliance in this sector. The main objectives of this study was to establish tax information on tax rates, tax penalties and fines and tax compliance cost on tax compliance level. This has been considered by the researcher to be the most key factors that affect tax compliance level in Kenya. This study was controlled by two theories, that is theory of partnership and theory of Allingham and Sandmo. The study used questionnaires and oral interview method to collect data. The population of the study was a number of 265 informal sector in central business district of Nairobi and a sample of 53 enterprises. Once the data was collected, it was coded and analyzed with the help of the SPSS. Mean, frequencies, and percentages were calculated. It was presented in tables, charts using simple percentages. correlation analysis was done in order to make a thorough conclusion on factors affecting compliance with tax laws in Kenya. It was clear from the findings that tax information is the greatest contributing factor in tax compliance. According to the study findings there is enough proof to conclude that low tax knowledge and education are associated with high levels of tax compliance. Their (KRA) main objective should be to offer tax information advices for free. Some of the key services that they should be offering that are in great need are; tax computation, filing of tax returns, which tax to be paid where, tax penalties and the due dates. This will not only help tax payers but also tax practitioners. KRA should also formally communicate tax information changes. KRA should ensure that there is no tax payer who doesn’t pay tax or file tax returns due to failure of tax understanding.
The Effects of Taxation of Intangible Assets On Tax Revenue: Tapping The Untapped Revenue in Digital Assets, Royalties, Licenses, And Contractual Customer Relations
(KESRA/JKUAT - Unpublished research project, 2018) Nguyo, Kevin Muteru
The intangible assets group as a source of tax revenue remains untapped in Kenya and like many developing nations. Despite taking the Lion’s share of most upcoming organizations, intangible assets are not offered the necessary focus in terms of tax administration. Most developing nations lack a general framework for the valuation and measurement of the intangible assets. As a result, it becomes difficult for the relevant authorities to formulate regulations for tax administration in line with intangible assets. The International Valuation Standards organization has established three different methods of valuation for intangible assets. The international Accounting Standards IAS provides for the valuation and accounting for intangible asset through IAS 38. Despite the existence of such measures most developing nations are yet to establish the means through which the revenue authorities can measure the intangible assets. Most organizations have their unique methods of valuation. This implies that the organization retains the authority to determine the value of the assets. The main purpose of this research was to explore the untapped sources of revenue for the Kenya Revenue Authority in the form of intangible assets. Precisely, this paper focused on the characteristics of intangible assets that make them easily taxable and a sustainable source of tax revenue. Intangible assets include royalties, licenses, and intellectual properties that yield huge economic benefits for the owners. This research focused on the intellectual properties and the extent to which the KRA can yield a considerable amount of revenue through the taxation of intangible assets. The researcher employed a descriptive survey research design. A descriptive survey consists of instruments such as questionnaires, observations, and interviews aimed at collecting data from a representative sample of a given population. The study targeted companies listed at the Nairobi Securities Exchange and select KRA officials. Owing to the sensitive nature of the study, the study relied on a convenient representative sample. The data was collected through interviews, and questionnaires. The researcher analyzed the data using SPSS. The researcher concluded that there is a strong relationship between tax revenue and the valuation of intangible assets. Based on the values of intangible assets held by the organizations under review, it is evident that KRA could increase its revenue base by tapping into the intangible assets. The researcher recommends that the government should adopt one of the valuation methods developed by the international valuation standards organization. This is in order to provide a platform for the development of regulations for the taxation of intangible assets. The development of a single valuation method would allow KRA to develop means of administering taxation for the intangible assets.
Effect of tax incentives on performance of manufacturing firms in Kenya
(KESRA/JKUAT - Unpublished research project, 01-10-18) Musau, Gilbert Kyalo
Tax incentive is a global phenomenon for governments for attracting more investments by companies operating in different economic sectors. The main objective of this study was to examine the effect of tax incentives on performance of manufacturing firms in Kenya, taking Nairobi County as a case study. The study was guided by the following specific objectives: to identify how investment deductions affect performance of manufacturing companies in Nairobi County, to examine the impact of wear and tear allowance on performance of manufacturing companies in Nairobi County, to investigate the influence of industrial building deductions on performance of manufacturing companies in Nairobi County, to examine the effect of tax exemptions and remissions on performance of manufacturing companies in Nairobi County, and to establish how tax holidays influence performance of manufacturing companies in Nairobi County. The study adopted New Growth Theory, Tax Discrimination Theory, and Theory of Investment Behaviour. Employing descriptive research design, the study’s target population was manufacturing companies in Nairobi County. There are approximately 343 manufacturing companies in the county spreading across different sectors (KAM). This study focused on three domains namely consumer goods, industrial goods, and healthcare goods companies. A sample of 137 respondents comprising of top managers, mid-level managers and junior managers was used in the study. Stratified and simple random sampling techniques were used to pick participants. Through a structured questionnaire, the study mainly used quantitative data collected through both face-to-face and self-administered interviews. Quantitative data was analyzed using Statistical Package for Social Sciences (SPSS) and Excel Worksheets. Qualitative data was organized using NVivo software and a thematic critical discourse and content analysis was done. Data was then presented through frequency tables and graphs as well as through narrative reports. The study adhered to ethical considerations, observing the principles of confidentiality and beneficence. The study established that tax incentives had a significant effect on company performance. However, it also emerged that not all manufacturing companies were aware of tax incentives and their effect on company performance. Besides, not all tax incentives had similar impact on company performance. It is anticipated that the study findings will help the government and tax agencies to address taxation in companies dealing in all sectors. The findings will also add to the existing literature in the area of tax incentives and company performance.
Effect of Excise Stamps On Monitoring Tax Revenue in Kenya; a Case of Spirit Manufacturers in The Large Tax Payers Office
(KESRA/JKUAT - Unpublished research project, 2018) Marangu, Linstrom Kinoti
Tax monitoring and revenue is of great importance to a country especially a country like Kenya which is highly dependent on tax revenue. The Kenya Revenue Authority introduced the use of stamps under its EGMS, which kicked off three years ago, as part of a wider scheme to combat illicit trade, seal revenue leakages and boost collection. “In order to ensure compliance, licensed manufacturers and registered importers of the affected products are advised to facilitate KRA’s technical teams to access the production lines for purposes of determining installation requirements”. The study sought to determine the effect of excise stamps on monitoring tax revenue in the alcohol industry in Kenya (case of spirit manufacturers in the large taxpayers’ office). The specific objectives are to determine the effect of demand of excise stamps on monitoring tax revenue in Kenya. To evaluate the effect of counterfeiting of excise stamps on monitoring tax revenue in Kenya. To assess the effect of declaration of excise stamps on monitoring tax revenue in Kenya. Lastly, to analyse the effect of enforcement on usage of excise stamps on monitoring tax revenue in Kenya. Ability to Pay Theory, Optimal Tax Theory and Theory of Tax Evasion were utilized in the study. The target population consists of all the firms in the large taxpayers’ office which are 6 in number. Purposive sampling was used where ten respondents from each firm in the large taxpayers’ office and the head of large tax payer office in the Kenya Revenue Authority (KRA) made up the sample of the study. Therefore, the sample size of the study was 61. The study was be based on descriptive research design. The research instrument of the study was questionnaire where closed ended questions were utilized. The reliability and validity of research instrument was ensured before the analysis of data. The data analysis of the study was based on descriptive and inferential analysis. Multiple regression model was be utilized in the inferential analysis of the study. The study established that the demand for excise stamps has a positive and significant effect on the monitoring tax revenue in the alcohol industry in Kenya. Also, the study showed that counterfeiting of excise stamps significantly affects the monitoring of tax revenue in the alcohol industry in Kenya. Furthermore, the analysis of study revealed that declaration of excise stamps significantly affects monitoring of tax revenue in the alcohol industry in Kenya. Lastly, the study provided evidence of a significant effect of enforcement of usage of excise stamps on the tax revenue monitoring in the alcohol industry in Kenya. The study recommends that government should come up with more effective measures relating to demand of excise stamps and monitoring of tax revenue as this will in turn enhance tax revenue. Also, government should come up with unique excise stamps as this will make counterfeiting difficult. This will ultimately discourage such practices and increase tax revenue. Government should come up with more effective tax monitoring system as this will also boost tax revenue. Lastly, the government of Kenya through the Kenya Revenue Authority should encourage the use of excise stamps as this will greatly impact on tax revenue. The study suggests that further research can be done on Spirit Manufacturers in the small tax payers office. Similarly, further studies can be carried out in the other sectors of the Alcohol industry. Lastly, further research can focus on tax payer education and monitoring of tax revenue in the large tax payers office.
Effect of iTax System On Revenue Collection from Small Medium Enterprises (SME) In Kenya: A Case of Kiambu County
(KESRA/JKUAT - Unpublished research project, 2018) Ngetich, Nicholas Kipyegon
iTax is a computing and accounting system for state revenues (levies, taxes) which stores all relevant (credit and debit) data in individual accounts in a data base, and thus helps monitor and control all tax transactions. It provides a convenient and efficient way to improve revenue collection, transparency in fiscal administration and management of local and national tax authorities. Taxpayers are given a personalized identification number which can be automated mostly by the tax authority to levy the processes and minimize the scope for tax fraud. The main objective of the study was to determine the effects of I-Tax systems on SME Revenue Collection in Kenya- a case of Kiambu County. Specific objectives include; to determine the effectiveness of the e-registration on revenue collection in Kenya Revenue Authority and to evaluate whether e-filling influence on revenue collection in Kenya Revenue Authority. The research adopted a descriptive study research design which determined the effects of I-Tax system on Revenue collection in Kenya. The case chosen for the study was Kenya Revenue Authority offices in Kiambu County-Thika station. Secondary data was used in the analysis and report. The study concludes that tax payer registration and Tax payer fillings overwhelmingly affected tax revenue collection of SMEs in Kiambu County. Therefore, the Electronic ITAX system has had a positive impact on Tax revenue collection in Kiambu County. The system has increased the number of registered tax payers aa well as it has increased the efficiency and speed of filling of returns. Based on the above conclusions we recommend continued training of Tax payer on filling of returns. KRA Kiambu County should hold consultative forums with its Tax payers. This will encourage voluntary tax registration and tax fillings. Eventually it will lead to increase in tax revenue collected
Challenges Facing Value Added Tax Refunds Payment Process by Kenya Revenue Authority
(KESRA/JKUAT - Unpublished research project, 2018) Mohamed, Fatuma Milgo
Delay in VAT refunds payment has led to businessmen and traders accuse KRA of being quick to collect tax, but slow in refunding. In recent past KRA has put in place several measures to ensure that VAT refunds are timely processed and paid. These include staff training, introduction of tax audit, information technology, compliance checks, legislation and compliance laws. These measures are geared towards accelerating VAT refund processes. However, this has not been the case, and majority of taxpayers have to wait for upto three years before receiving tax refunds. The objective of the study was to establish the perceived challenges facing Value Added Tax (VAT) refunds payment process by Kenya Revenue Authority with an aim of establishing administrative impediments facing the process. The study used both qualitative and quantitative research methods to collect and analyze data. Structured questionnaire was administered to collect primary data from a population of 200 employees of Kenya Revenue Authority in the Domestic Taxes Department, Refund section. Ethical consideration was adhered to when collecting data from respondents. The study found that the further improvements are required in the area of increasing VAT refund administration capacity with an aim of increasing timely refund application, processing and payment. The Tax Authority needs to pay attention to taxpayer education, VAT refund compliance and timely audits. Finally, there is the need to recruit more staff and embark on training of newly engaged staff.
Factors Affecting Rental Income Tax Collection; A Case Study of Taxpayers in North of Nairobi District, Nairobi County
(KESRA/JKUAT - Unpublished research project, 2018) Rukaria, Anne Karimi
Effective running of devolved functions requires adequate resources. Currently the larger proportion of county government financial resources is sourced from the national government. This is attributed to the county governments’ insufficient capacity to mobilize revenues within their jurisdictions. The study aimed at establishing factors affecting rental income tax collection in the Kasarani sub county, Nairobi County, Kenya. Specifically, the study looked at landlords’ awareness level of their tax obligation, connection to iTax systems and the factors that curtail landlords from meeting their tax obligation in general. The study drew data from landlords in Kasarani sub County of Nairobi County. The study adopted descriptive research design. A sample of 330 respondents was drawn from the target population using stratified random sampling method. A structured questionnaire was administered on the sampled respondents. The questionnaire was pilot tested to authenticate its reliability and validity before it is administered in the final study. Data was analyzed descriptively and inferentially using SPSS for Windows. Findings were represented using frequency tables to ease understanding. Results from the study indicate that, first the residential income tax collection efforts have not borne much fruits as it would have been expected because quite a significant percentage of the landlords do not pay their rental income tax. Secondly, the Government is faced with numerous challenges as far as collection of residential income tax is concerned, some related to the internal infrastructure in place that supports tax collection and others related to the socio-economic in nature and include inadequate training for the landlords. Thirdly there is a strong positive correlation coefficient of 0.87. This indicates a strong positive correlation between the age of tax payer and the amount of tax paid. Recommendations from the study are for Government to ensure landlords are trained and equipped with the required skills relating to paying rental income tax. There should also be a regular awareness to the public on various tax obligations. The public should also be more enlightened on tax return and various channels through which the landlords can make use of.
Effects of Communication Channels On Level of VAT Compliance in Kenya: A Survey of Nairobi Central District
(KESRA/JKUAT - Unpublished research project, 2018) Olumbe, Lydia
The purpose of this study was to determine the effect of communication channels on level of VAT compliance in Kenya. The study covered Nairobi central district. It further, describes the statement of the problem explaining why VAT compliance is an issue in Kenya and communications Channels such as social media, telephone communication and web portal need to be effectively utilized as a means of communication like in other developed countries to mitigate the communication gap. Research objectives and questions were outlined in relation to the research topic. The scope of the study was described in detail and finally a justification for this research was clearly outlined. Chapter two discusses exploration of communication channels and how they affect VAT compliance. The discussions were based on three chosen theories that provided the theoretical background of this study. The existing empirical evidence for each variable and a conceptual framework of the same followed this. Critics of existing literature advanced by different scholars was discussed at length. A summary was drawn from the literature outlined. Chapter three outlined the research methodology that was used in this study of effects of communication channels on level of VAT compliance in Kenya. It provides the following subsections: the research design, target population, sampling frame, sample and sampling technique, data Collection Instruments, data collection, pilot testing, and data collection tools and procedures and data analysis. The researcher presented the findings starting with response rate followed by the background information of the respondents. Findings were presented in both descriptive and inferential statistics. Lastly, chapter five the findings also revealed that there is a positive correlation between social media, telephone communication and web portal with VAT tax compliance. The research established that KRA should embark on revamping communication channels such as Social media, Facebook, Twitter, and You tube. Another channel of communication that needs to be enhanced is telephone communication use of SMS and continuous follow up on taxpayers reminding them on their tax liabilities to improve VAT compliance. The findings also revealed that KRA should invest on a search engine optimized website, which is user centric and simple for it to improve its communication with its loyal taxpayers. This will significantly improve the level VAT tax compliance. The findings indicate that 65.9% of VAT tax compliance is attributed to a combination of the three independent factors investigated in this study (social media, telephone communication and web portal).
Challenges Facing Taxation of the Informal Sector in Kenya: Case Study of Nairobi County
(KESRA/JKUAT - Unpublished research project, 2018) Memu, Pamela Kitinga
The large number of potential taxpayers in the informal sector, and the difficulties of monitoring “hidden” entrepreneurs and small-scale firms, can give rise to serious revenue collection costs for tax authorities in developing countries. At the same time, the revenue potential of taxpayers in the informal sector is fairly modest, as their taxable incomes are usually quite low. According to a World Bank study in year 2006, Kenya’s informal sector constituted 98 percent of all businesses in the country, absorbed annually up to 50 per cent of new employment seekers and had an employment growth rate of 12-14 percent. In the endeavor to realize this goal, KRA faces several problems when dealing with the informal sector. Some of these problems include financial literacy level of the taxpayers, book keeping and capital requirements. Fischer tax compliance model provides a framework for understanding the influence of socio-economic and psychological components on taxpayer’s compliance decision. AS theory holds that the government deters tax evasion through a sanction arrangement and audits. A tax payer will decide to violate the fiscal laws and evade his or her tax obligations when he or she perceives that the cost of evading tax is too low, believing he or she does that he or she is unlikely to be detected or audited. The SMEs are prone to tax evasion as they face difficulties in complying with tax laws. They are expected to comply with strict deadlines, keep proper books of accounts. This kind of environment leads to tax evasion. The study adopted a census research design with a target population of 79. This study used primary data collection through questionnaires while Secondary data was collected from published materials containing the relevant information on revenue collected from the informal sector over a period of stipulated time. The study was analyzed by use of inferential statistics and descriptive statistics by use of SPSS version 24 and the multi regression model was adopted. Findings revealed that there is a strong positive correlation between the variables of the study as shown by the 69.4% while 48.1% of variations in the dependent variable can be explained by changes in the independent variables hence, the remaining 51.9% is representative of other factors not accounted for in the study. Findings reveal that problems like tax complexity; low tax morale, low tax compliance and shadow economy may all be reduced by increasing the level of taxpayers' (individuals') financial literacy. Findings also reveal that most micro-enterprises do not keep books of accounts that will allow them to extract useful accounting information due to lack of accounting knowledge. The study thus recommends that policy makers should introduce stringent measures with respect to tax penalties and fines on the informal sector firms and tax payers who violate and act as an obstacle in the administration of this tax.
Effect of Tax Amnesty On Rental Revenue Collection: A Case Study of South of Nairobi
(KESRA/JKUAT - Unpublished research project, 2018) Mbithe, Jacinta
Tax revenue remains the most significant source of finance for both developing and developed countries. Numerous developing countries have conducted tax amnesties in their fiscal policy to promote revenue collection. Taxation is the principal source of government revenue for budgetary purposes. Tax amnesty is a limited-time opportunity for a specified group of taxpayers to pay a defined amount, in exchange for forgiveness of a tax liability (including interest and penalties) relating to a previous tax period or periods and without fear of criminal prosecution. It typically expires when some authority begins a tax investigation of the past-due tax. Tax amnesty only collects taxes in arrears previously undeclared. This measure helps to boost short term revenue collection for the governments but does not affect long term compliance. It therefore acts as debt management strategy in addition to helping the government collects the overdue taxes to finance budgets and reduce deficits. ). A number of scholars have researched on the subject of the use of tax Amnesty as a tool of expanding the tax base of an economy. Kwatemba, (2016), study on the impact of tax amnesty on revenues in Kenya, concluded that through the amnesty, tax evaders are encouraged to pay their dues. . A descriptive study was appropriate for this study as it sought to portray accurately the characteristics of a particular situation or a group. The target population was 8000 landlords who are earning rental income both compliant and non-compliant. The analysis was both descriptive and inferential. The descriptive analysis involved frequencies and percentages. Regression analysis and correlations was conducted to determine the relationship between the dependent variable and the independent variables of the study. The findings of the study reveal that effective tax education can change the attitude and perception of property owner towards tax compliance and that the the KRA as an administration body should reducing taxpayer burden by simplifying the tax laws and administration. There is a positive correlation between the variables of the study as shown by the 47.1% while 22.2% of variations in the dependent variable can be explained by changes in the independent variables hence, the remaining 77.8% is representative of other factors not accounted for in the study. The study therefore recommends that, KRA ought to create a database through agents who collect data relating to buildings and their owners and embrace enhanced recovery measures for charges over properties.

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