Factors that influence the processing of tax refunds at Kenya Revenue Authority
Munyalo, Wycliffe Kyenze
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Taxpayers complain that tax refunds process is long and tedious. Delay in tax refunds payment has led to businessmen and traders accusing KRA of being quick to collect tax, but slow in refunding. KRA has in the recent past put in place several measures to ensure that tax refunds are timely processed and paid. These measures are geared to accelerating tax refund processes. However, this has not been the case, and majority of taxpayers have to wait for up to five years before receiving tax refunds (Hira, 2011). The purpose of this study was to identify the factors that influence the processing of tax refunds by Kenya Revenue Authority (KRA) and which if addressed would lead to an improvement in the process. Descriptive research design was adopted with a focus on both qualitative characteristics and status of tax refund process at Kenya Revenue Authority. The target population was 90 staff involved in processing refunds in three departments namely the Domestic Taxes Department, Customs Services department and Finance department. A sample of 45 respondents (50%) was selected using stratified random sampling technique and interviewed based on a semi- structured questionnaire. The data collected was analyzed using both qualitative techniques (especially content analysis) and quantitative techniques (especially descriptive statistics and correlation analysis) with the aid of the SPSS package. The report is presented in terms of tables. The results of descriptive analysis showed that the speed of tax refund processing was good (mean = 3.2561). The results also showed that the funding was inadequate (mean = 1.50), the audit and compliance checks were inadequate (mean = 2.4146); the information technology used was inadequate (mean = 2.4634); while the staff was considered to be inadequate to carry out the work (mean = 2.4544). The results of correlation analysis further showed that all the four factors had a significant positive influence on tax refunds. Treasury funding (R= 0.790, p = 0.000); audit and compliance (R = 0.933, p = 0.000), information technology (R = 0.594, P = 0.000) and staff adequacy (R = 0.725, P = 0.000). The study concludes that though the Treasury has been consistent in funding the Kenya Revenue Authority for monthly settlement of tax refunds, the funding is inadequate as it does not enable the Kenya Revenue Authority to settle all the tax refund arrears. The results further lead to the conclusion that in as much as the Kenya Revenue Authority performs regular audit and compliance checks for all the tax refund claims, these audits are inadequate. The study also concludes that despite the adoption of information technology by the Kenya Revenue Authority in the processing of tax refunds, this technology is inappropriate. Lastly, the study concludes that the staff deployed to process tax refunds is inadequate but competent. The study recommends that the Treasury should increase the monthly provisions for tax refunds. Secondly, the Kenya Revenue Authority should perform post- audit compliance checks. The KRA should also automate all sections that deal with tax refunds. The KRA should also post additional staff to the tax refunds sections in order to speed up the process as the staff currently deployed in these sections is inadequate. If possible, KRA should separate revenue collection function from the processing of refunds. More studies need to be carried out in this area especially to find out what other factors might influence processing and payment of tax refunds.