Influence of internal controls on revenue collection at the Customs services department of the Kenya Revenue Authority
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Date
2018
Authors
Cheptarus, Everlyn Kangogo
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
While customs taxes have played critical roles in the revenue levels of the diverse countries, there are noted challenges with customs taxes that impact on the overall revenue productivity. The customs duty is often complex and susceptible to revenue leakage as taxpayers have many avenues to evade, including collusion with tax officials, making it difficult for the evasion to be detected. In Kenya, by October of 2015, KRA had missed its revenue projections by 11.4 billion from custom taxes including value added taxes on imports, import declaration fees, and railway development fees. In the 2015/2016 financial year, several departments of customs department missed their revenue collection targets. The VAT on imports declined by 3.1 per cent to Sh131.47 billion while Import Declaration Fees also dropped 4.7 percent to Sh25.85 billion. This study therefore seeks to examine the influence of internal controls on revenue collection productivity at customs department of Kenya Revenue Authority (KRA). In particular, the study examined the role of goods entry control aspects, Information and Communication Technology (ICT), and staff risks control management on revenue collection productivity. The Study found that the 70.4% of the variance of the revenue collection was impacted by Internal Controls, Goods entry control aspects, and ICT levels. The study also found that Internal Controls, Goods entry control aspects and ICT were significant predictors of Revenue Collection in a multiple linear regression model. When there are no reforms and ICTs Influence is 0, the average revenue is 1.354 in the likert scale implying that people would strongly disagree there is improvement in Revenues generated. While holding ICT constant, a unit increase in Goods entry control aspects will cause a 2.527 increase in the Revenue generated while a unit decrease in Goods entry control aspects will cause an average 0.527 decrease in Revenue generated on the likert scale. While holding Goods entry x control aspects to a 0 constant, a unit increase in ICT intervention will cause a consequent 1.802 average increase in Revenue generation in the likert scale. Consequently, a unit decrease ICT intervention will cause an average decrease of 0.802 in the likert scale. The study recommends that KRA should emphasize on the Internal Controls, Goods entry control aspects, and ICT levels as they play a significant role in the determination of revenue collection.
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Keywords
Internal controls, Revenue collection, Custom excise