Abstract:
In several developing countries, tax collection by government relied on manual taxation, but there is now more drive towards introduction of electronic online filling of taxes. In Kenya, online tax system relies on integrated tax system known as iTax system. This study determined the relationship between online tax system and tax compliance among online traders in Uasin Gishu in Kenya. The study is based on three theories as part of the theoretical framework, that is, the Technology Acceptance Model (TAM) Theory and Game Theory Model of Equilibrium in Tax Compliance. The research study adopted a positivist research paradigm and explanatory research design. Primary data were collected using online questionnaires from a sample of 160 online traders respondents in Uasin Gishu. The study found that during the response to five attributes of tax compliance, the there was low levels of tax compliance. The study also reported low levels of perceived iTax security concerns as well as perceived tax system stability. The multiple linear regression coefficient (R2 = 0.863, P < 0.001) was positive indicating a positive correlation between perceived iTax security and perceived tax system stability with tax compliance. We conclude that perceived security risks concerns and perceived tax system stability affected tax compliance among online traders in Uasin Gishu County. Based on the findings, it is suggested that policy makers should not just place emphasis on technology but pay more attention on the characteristics of potential iTax users, e.g. their perceived security and system stability while implementing iTax service.