Effect Of Online Services On Tax Compliance Behaviour By Enterprises In Western Region

ABSTRACT

Tax plays a vital role in Kenyan economy as it finances the public expenditure of the country.

Due to increased public spending, there is need to increase the revenue base. One of the sources

of revenue for the Government is taxation. This calls for increase in compliance by tax payers as

this increase in revenue may not be possible if the taxpayers are not compliant. One of the

reforms which have been put in place by Kenya Revenue Authority to enhance tax collection is

the online services. The study was about the taxpayer compliance behaviour in relation to the

online services. The objectives of the study were: to determine the behaviour of taxpayers on

compliance; to find out the level of utilization of online services by enterprises in Western

Region; to find out the effect of the online services on tax compliance by enterprises in Western

Region and lastly find out how the Authority can improve tax compliance through online

services. The study adopted descriptive study design targeting a population of 150 enterprises

accessing online services and registered with Kenya Revenue Authority and operating in

Western Region from which a sample of 45 respondents was sampled using stratified random

sampling. Primary data collected by use of questionnaires and then analyzed using descriptive

statistics and presented in graphs and tables to ultimate users. The taxpayers' online services had

made tax registration hard to implement in their business settings and further, most of the

taxpayers were not aware tax registration process offered by the online services and could not

access their tax statement online which could enhance their tax compliance. The level of use of

the taxpayers' online services was established to by the study to have a significant effect on tax

compliance of the taxpayers by improved book keeping in electronic form. From the study data,

it was established that the implementation of the taxpayers' online services faced various

challenges from the taxpayers which had a significant effects on their tax compliance. Even

though accessibility of the internet services was not a significant challenge to most taxpayers, it

is still a major challenge to some taxpayers who cannot access internet due to their location or

cost related to the accessibility. It was established that taxpayers were influenced in their

decision to use taxpayers' online services by their peers. The tax laws also posed as a challenge

to most taxpayers hence their tax compliance was highly affected as a result. The study tested

four factors (taxpayers' education, taxpayers' recognition and rewards, tax officers training and

tax rates adjustments) whether they could overcome the challenges to the tax compliance among

the taxpayers in the Western region and found that these factors if well implemented can help

curb the challenges. The study made the following suggestions for further research: study was

limited to the Western region of KRA. Future studies on the same topic could be extended to

other parts of Kenya, investigate on non-online taxpayers service effects on the compliance of

taxpayers, research on other challenges hindering the adoption of the taxpayers' online service

among the business enterprises apart from the four identified factor. And to study on other

strategies which can be employed by KRA to overcome challenges of compliance fromvtaxpayers in Kenya.