Debt Management Drivers and Effectiveness of Tax Debt Management in Kenya Revenue Authority

Abstract

Effectiveness of tax debt management in any economies contribute to the growth of those economies through improved tax revenue collection. However, this improved tax collection maybe compromised for many reasons including ineffective debt management drivers. Therefore, despite adoption of debt management drivers, there still have an ineffective debt management by Kenya Revenue Authority. Thus, this study therefore sought to find out the effect of debt management drivers on the effectiveness of tax debt management in Kenya Revenue Authority. The specific objectives of the study were to determine the effect of the organizational structure, organizational policies, capacity building and information technology systems on effective Tax debt management in Kenya Revenue Authority. The study adopted the economic deterrence theory and the theory of planned behaviour. A descriptive research design was also employed in the study.The target population of the study was the 355 employees working in debt management section, investigations and enforcement department section, refunds section and tax return processing section. The researchers utilized stratified random sampling in the selection of the sample size of 188 respondents. Both primary and secondary data was used. Secondary data was gotten from the annual reports of Kenya Revenue Authority while the primary data was collected using semi-structured questionnaires. Multiple linear regression model was adopted. Quantitative data were analyzed by utilization of descriptive and inferential statistics with the help of SPSS version 22. Descriptive statistics consisted of frequency distribution, mean and standard deviation. Further, a correlation analysis and multiple regression analysis were used to establish the relationship between the dependent and the independent variables. The data was then presented in tables and graphs. The study found that organization structure, organizational policies, capacity building and information technology system have a positive and significant effect on effectiveness of tax debt management in Kenya Revenue Authority. The study concludes that debt management drivers have a positive and significant effect on the effectiveness on tax debt management. The study recommends that Kenya Revenue Authority should revise its structure to make it less bureaucratic, remove double reporting structures and improve on decision making so as to ensure a reduction in tax debt. In addition, there should be revision of policies on procedures and requirements for the approval of waivers and also ensure involvement of stakeholders in formulation and implementation of policies. Also, Kenya Revenue Authority should provide adequate resources so as to ensure the implementation of tax related policies and strategies