Effect of (I Tax) System on Tax Compliance in Kenya: A Case Study of Selected Large Taxpayers in Kenya

Abstract

The objective of this study was to examine the effect of iTax system on tax compliance levels in Kenya. The specific objectives that guided this particular study include: to investigate the effect taxpayer identification and registration on tax compliance in Kenya, to investigate the effect of verifying taxpayer‘s liabilities on tax compliance in Kenya, to establish the effect of enforcement of tax law on non-compliant taxpayers on tax compliance in Kenya and to analyse the effect of reporting and statistics on compliance in Kenya. The study was carried out at Kenya Revenue Authority Domestic taxes department in Nairobi-Large taxpayers Office. The research problem was solved using descriptive survey design. The main source of data was primary data. The study population comprised mainly 1.238 large taxpayers. In this study a sample size of 10% was selected because it was considered reasonable enough for any study. As a result, a sample size of 62 was arrived at. Presentation of the analysed data was done in form of tables, charts, and graphs so as to help provide a clear understanding and interpretation of the study findings. The tables provided summarized research data derived from the questionnaires. The study also revealed that tax compliance is influenced by taxpayer registration (beta, 0.528), verification (beta, 0.461), enforcement (beta, 0.549) as well as reporting (beta, 0.603). The study concludes that tax compliance in Kenya is influenced by taxpayer registration, taxpayer verification, taxpayer enforcement and taxpayer reporting. Additionally the study concludes that reporting is the highest influencing factor when it comes to tax compliance followed by enforcement, registration and then taxpayer verification. The study recommends that KRA needs to enhance compliance levels by focusing on taxpayer registration and verification. Additionally KRA needs to focus on taxpayer enforcement so as to enhance tax compliance. Finally KRA needs to enhance taxpayer education so as to increase taxpayer attitude towards tax compliance.