Effect of information technology on tax compliance by Kenya Revenue Authority in Nairobi, Kenya
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Date
2019
Authors
Olonde, Jeconia Omondi
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
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.
Description
Keywords
Block chain, iTax, Information technology