Effect of excisable goods management systems on excise duty collection in domestic taxes department, Nairobi region, Kenya Revenue Authority

Abstract

The introduction of the new excise stamps with security features is in line with the provisions of the Excise Duty (Excisable Goods Management System) Regulations, 2017 that requires all excisable products manufactured in or imported to Kenya, with the exception of motor vehicles, be affixed with excise stamps. The new generation stamps have enhanced security features leveraging on technology which are meant to deter counterfeiting. Excisable goods management system regulation was formulated in Kenya to deter counterfeiting, facilitate tracking of goods, enable accounting and facilitate authentication of stamps affixed on excisable goods. However, despite the introduction and use of excisable goods management system, excise duty non- compliance in Kenya remains high. Therefore, this study sought to investigate the Effect of Excisable Goods Management Systems (EGMS) on Excise Duty collection in Domestic Taxes Department, Enforcement Division, Kenya Revenue Authority. The specific objectives of the study were to determine the effect of verification of stamps, application procedure and excise stamp security features on excise duty collection in Domestic Taxes Department, Enforcement Division at Kenya Revenue Authority. The study was anchored on three theories, namely; Technology Acceptance Model, Unified Theory of Acceptance & Theory of Reasoned Action. The study employed explanatory research design. The target population of the study was 214 registered importers and manufacturers of excisable goods in Kenya as well as staff working in Domestic Taxes Departments- Enforcement Division and a sample size of 139 respondents. This study used stratified and simple random sampling in the selection of the 214 respondents from the target population. This study used of both primary and secondary data. Secondary data to be obtain from the annual reports of Kenya Revenue Authority. Close ended questionnaires were used in this study to collect the primary data. The research instrument was generated both quantitative and qualitative data. The data was analyzed using descriptive and inferential statistics to determine the association between variables, with the measurement of variables based on 5-point Likert Scale. Correlation and regression analysis provided an understanding of the relationship between the study variables. The study was analyzed by use of inferential and descriptive statistics. The study results showed that regression of coefficients showed that verification of stamps, stamps application procedures and stamps security features and excise duty collection were positively and significantly related (β=0.454, p=0.000). (β=0.257, p=0.000). and (β=0.468, p=0.000) respectively. From the study findings, verification of stamps, applications procedures and stamps security features had positive and significant relationship with excise duty revenue collection excise duty collection in Domestic Taxes Department, Enforcement division, Kenya Revenue Authority. This study therefore recommends that enforcement of the requirements of verification of stamps including adequate light for verification of stamps so as to ensure impartial verification of stamps and identification of counterfeit stamps. In addition, study recommends that the management of Kenya Revenue Authority should reduce the bureaucracies involved in the issuance and application of stamps so as to enhance compliance. Furthermore, the study therefore recommends that the management of Kenya Revenue Authority should enhance the features of excise stamps to prevent counterfeiting