Itax Adoption Determinants and Value Added Tax Compliance among Large Corporate Taxpayers in Kenya
Maithya, Rose Ndoti
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i-Tax is the new system that has been developed by the Kenya Revenue Authority (KRA) to ensure online submission of tax returns and other taxation related transactions. Despite the increasing need to raise the level of revenue collection and enforcement so as to provide public services, developing countries still face the challenges of low tax compliance. This leads to frequent tax reforms aimed primarily at closing short-term revenue gaps. The Kenya Revenue Authority presented the i-tax framework in the year 2013 to additionally build up the utilization of innovation to make a cutting edge impose gathering for Kenya. This prompted an expansion in income accumulation, for instance in the fiscal year 2016/2017, KRA gathered Sh.1.365 trillion compared to the target set of KSh. 1,415 trillion. The Authority increased its revenue collection by 13.8 percent compared to the previous financial year 2015/2016 where it collected Sh1.210 trillion. The increase was attributable to growth in the various taxes, for example the Value Added Tax (VAT) that had a 21.2 percent growth attributed to enhanced compliance measures. Despite these efforts, the Kenyan government is still experiencing a lot of problems as far as effective and efficient tax administration is concerned hence affecting revenue collection. This research looked at the effect of itax adoption determinants on VAT compliance among large corporate taxpayers in Kenya.The study was guided by the following hypothesis: H01: Large taxpayers’ perception towards the utilization of itax framework does not have significant effect on VAT tax compliance among large corporate taxpayers in Kenya.H02: Large taxpayers’ level of IT literacy does not have significant effect on VAT tax compliance among large corporate taxpayers in Kenya.H03: Large taxpayers’ knowledge of tax laws does not have significant effect on VAT tax compliance among large corporate taxpayers in Kenya and H04: Costs of compliance does not have significant effect on VAT tax compliance among large corporate taxpayers in Kenya.This study was based on these theories; Fischer tax compliance model, the economic theory of tax compliance, Diffusion of Innovation (DOI) and Theory of Technology Acceptance Model. The study followed a positivism research philosophy. The study employed a descriptive research design. The target population was the large corporate taxpayers in Kenya.The study targeted all the 1278 large corporate taxpayers in Kenya registered for VAT. Stratified random sampling technique was used to select 192 respondents for the study. A five-point likert scale structured questionnaire was used to collect primary data. A pilot test was conducted to assess validity of the research instruments whereas Cronbanch’s coefficient alpha was used to determine reliability of the research instruments. Both descriptive and inferential statistics were used to analyze the data. Statistical significance of relationships among selected variables was determined using multiple regression analysis. Results obtained were presented using tables.The study established that online taxpayer registration, online tax return processing, online compliance and monitoring activities; and electronic tax payments have a significant contribution on revenue collection at KRA. The study concluded that when all these iTax components were embraced, revenue collection, accounting for taxes paid, monitoring of taxpayers, service delivery to taxpayers and compliance improved. This study recommended that KRA management should focus on taxpayer facilitation through a robust system of customer relationships management, efficient complaints resolution and ensuring that more resources are invested in user friendly online tax systems in order to realize long term benefits.