Efficacy of I Tax System on Tax Administration in Kenya

Abstract

The success of the KRA largely hinges on the efficacy and efficiency of the newly introduced iTax system in increasing tax compliance and closing tax leakages through tax evasion. The iTax system was launched in October 201 1 in a bid to increase efficiency and ensure better compliance with tax laws (KRA, 2014). The iTax system is a webbased application that gives taxpayers the convenience of filing returns and registering tax payments from the comfort of their homes or offices. The current system allows taxpayers to file returns and agency revenue, including Sugar Development Levy and Kenya Bureau of Standards. The broad objective of the study was to establish the efficacy of the itax system on tax administration in Kenya. A Correlation research design was undertaken in order to ascertain reliability of data collected to describe the relationship between the variables of interest in the study and consequently test the research hypothesis. This study collected secondary data. Secondary data was obtained from published material and information from other sources such as annual reports and published data. The research obtained quantitative data. Descriptive and inferential statistics were employed in data analysis with aid of the Statistical Package for Social Sciences (SPSS) package. Descriptive statistics included percentages and measures of central tendency (mean and standard deviation). Paired t-test was used as an inferential statistic. The collected data was analyzed through descriptive statistics. The study established that KRA‘s variability of the revenue return after itax implementation was 14.876 billion, while the variability of the revenue return during and before itax implementation was 7.907 billion and 13.4415 billion respectively. The study concluded that itax implementation led to an increase in the variability of the revenue return for the periods under study. It also concluded that the quarterly abnormal revenue volumes fluctuated before, during and after itax implementation, with the period after itax implementation experiencing sharp fluctuations. iTax actually has an effect to revenue collection as according to the t – tests there is significance in the correlation between tax collected before the itax implementation and after the itax implementation. This clearly indicates that itax implementation increases revenue collection. That in essence means that the itax system is efficient in tax administration in Kenya. Thus it is right to say that itax system is directly related to tax administration. Based on the findings and the analysis of the research done, it was recommended that more training and or marketing of the online system should be done by KRA to ensure that taxpayers who embrace the system increase. The government should also improve connectivity to enhance compliance among small taxpayers.