Effects of adoption of electronic tax systems on tax revenue collection by Kenya revenue authority in Nairobi region, Kenya

Abstract

Despite the tax modernization, there are concerns that the challenges that confront the Ministry of Finance and Kenya Revenue Authority today are not much different from the challenges that faced these revenue authorities before the electronic systems as they still fall short of the revenue targets. Therefore, the purpose of carrying out this study was to examine the effect of I-Tax System, Integrated Cargo management system (ICMS) and Excise Goods Management System (EGMS) on revenue collection by Kenya Revenue Authority. In review of literature, the study was anchored on the following theories: The Unified Theory of Acceptance and use of Technology, Diffusion of Innovation Theory and Technology Acceptance Model. The methodology of the study constituted the use of explanatory research design. The population of this study was generated from Customs Services, Domestic Taxes– Large Taxpayers and Domestic Taxes-Medium & Small Taxpayers with a total population of 700 staff and sample of 254 respondents was picked using stratified random sampling. The result of Multiple Regression Analysis showed that there was positive and significant relationship between I-Tax System and revenue collection at (β 1 ) 0.274, t=4.348, p value <0.05). The analysis implied that a unit change in I-Tax System increases level of revenue collection by 0.274 units when holding other factors constant. The study findings also revealed that there was a positive and significant relationship between Integrated Cargo Management System and revenue collection at KRA (β 2 ) 0.324, t=5.625, p value <0.05). The analysis implied that a unit change in Integrated Cargo Management System increases level of revenue collection by 0.324 units when holding other factors constant. The study further showed that there was a positive and significant relationship between Excise Goods Management System and revenue collection at KRA (β) 0.321, t=5.580, p value <0.05). The analysis implied that a unit change in Excise Goods Management System increases revenue collection by 0.321 units when holding other factors constant. The study recommends that the management of Kenya Revenue Authority should ensure that adequate public awareness is done to ensure that potential tax payers all register in the I-Tax, ICMS and EGMS systems. This will ensure that revenue collection increment is realized considering all the registered tax payers can be monitored if they are fulfilling their tax obligation Therefore, studies suggest the need to a similar topic but the case of reference should be on business community or traders in particular.