Integrated Tax Management System and Performance of Value Added Taxes of Large Taxpayers, Nairobi County, Kenya
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Date
2019-11
Authors
Otieno, Erick Okoth
Abdul, Farida
Journal Title
Journal ISSN
Volume Title
Publisher
Globeedu Group
Abstract
In recent years, the challenge of ensuring tax compliance has become the centre of both academic and policy discourse in
Kenya due to the importance of tax revenue for the development of the country. The integrated tax system was
introduced in Kenya in 2011 with the overall aim of improving tax compliance and hence the performance of the Kenya
Revenue Authority. However, despite the introduction of the i-Tax system, Kenya Revenue Authority has been unable to
meet its revenue targets. For example, a report by the auditor general issued in 2018 indicated that the country was
likely to lose Kshs 18.5 billion of Value-Added-Tax from approximately 20 large tax payers. The aim of the study was to
investigate the effect of iTax system on the performance of Value-Added- Tax by large taxpayers in Nairobi County. The
study was guided by the following objectives to determine the effect of the management of users, accuracy of assessment
of taxation, and detection of non-compliance on the performance. The study was anchored by the Optimal Commodity
Sales Taxes Theory, Expediency Theory of Taxation, and Resource Based Theory. The study adopted the descriptive
research design. The study sampled the thirty-five account managers in charge of the 1,167 large taxpayers in Nairobi
County. The study used primary data collected using questionnaires. The study established that the management of users,
the accuracy of assessment of taxation, and the detection of non-compliance had improved following the introduction of
the iTax system. However, the I Tax system had not been able to ensure and enforce full compliance. The study concluded
that the use of I Tax system made it easier to manage the large tax payers but the system was not able to motivate the
defaulters to make payments. The study recommends that mechanisms should be put in place to compel defaulters to
make full payments. Using the multivariate analysis, the study established that the management of users, accuracy of
assessment of taxation, and detection of non-compliance had a positive and statistically significant effect of the VAT
collected from large taxpayers in Nairobi County, Kenya. The study recommends that Kenya Revenue Authority should
continue using the integrated tax systems and to upgrade it to ensure full compliance.
Description
An Article Published in The International Journal of Business & Management
Keywords
Integrated tax management, Accuracy, Assessment, Detection, Non-compliance, Value-added-tax