Effect of information technology on tax compliance of the selected logistic companies in Kenya

Abstract

Tax compliance in the logistics industry is crucial due to the complex web of tax regulations that govern transportation and supply chain operations. In Kenya, logistic companies face several tax compliance challenges, including navigating complex international tax regulations, managing diverse tax jurisdictions, and coping with changing tax laws. This study aimed to examine the effectiveness of information technology on raising Tax compliance by Logistic companies in Kenya. The specific objectives of the study were; to examine the influence of IT usage, IT features and IT security on tax compliance by Logistic companies. The study was anchored by Technology Acceptance Model, Optimal Tax theory and Diffusion of Innovation theory. This study utilized explanatory research design. The unit of analysis was employees of the eight selected logistic companies. The unit of observation will be three hundred and eighty two (382) employees comprising of top managers, middle managers and support staff. Stratified purposive sampling technique was going to be used. Similarly, the sample size of one hundred and ninety six (196) will be computed using Yamane's formula. Data collection was achieved through use of qquestionnaires, which was piloted to test the validity and reliability of research instruments. Quantitative data was analyzed using descriptive statistics such as mean and standard deviation and presented in form of tables, pie-charts and bar-graphs. Inferential statistics such as correlation analysis and multiple regressions were used to determine the relationship between variables. The findings showed adjusted R 2 = 0.114, which means that the predictor variables; IT system usage, IT system features and IT security explains 11.4% of the variability of tax compliance by logistic companies, which is a low effect. However, ANOVA showed that the model was statistically significant, F = 8.521, p = .000. This indicates that the model applied can statistically significantly predict tax compliance by logistic companies. Coefficients showed that that IT system usage influences tax compliance by 13.3% (β = 0.133, p=0.110>0.05), features of the IT system influences tax compliance by 29.1% (β = 0.291, p=0.818>0.05), while IT security influences tax compliance to a little extent, 0.1% (β = 0.001, p=0.520>0.05). Furthermore, hypothesis testing revealed that Information technology usage, features and security have significant effect on tax compliance by logistic companies (P-value=0.110>0.05), (P- value=0.818>0.05) and (P-value=0.520>0.05) respectively. This implies that tax payers consider tax system usage, features or functionalities and security features as factors that determine their tax compliance. This study recommended that KRA should ensure that their IT systems are easy to navigate and use; online system (i-tax and ICMS) should have relevant and secure features. This is to boost taxpayer's perception, and improve on the adoption and use which consequently improving tax compliance