Abstract: The Kenya Revenue Authority (KRA) recently made changes from the integrated tax system to the iTAX system aimed at encouraging use of the internet to file taxes so as to boost tax compliance and revenue collection. The objective of this study was to determine the effects of iTAX on VAT Compliance on SMEs in Wote town, Makueni County, Kenya. The specific objectives of the study were, To determine how registration of VAT taxpayers using itax affect VAT compliance, and whether ICT knowledge on Wote town taxpayer has effect on VAT compliance. The target population of this study composed of 581 SMEs taxpayers from Wote Town of Makueni County. The researcher used Radom sampling method to pick a sample of 120 VAT taxpayers the response rate was 87. Both primary and secondary data was used. The data collected was analyzed using ordinary linear regression model. The study found out that majority of the respondents had registered as taxpayers with most of them having registered for VAT and income tax. Majority of the respondents had registered as taxpayers since 2014 with a higher percentage in 2016. Non registered respondents cited lack of information on when and where to register, too lengthy registration process and KRA offices being located far from Wote town. Registered respondents of Itax and integrated tax system cited less cost, simplicity and time required as benefits of filling VAT returns online and that the respondents had minimal ICT knowledge. The study concluded that registration of VAT taxpayers using Itax enhances revenue collection by KRA. It also enhances the SMEs level of understanding on KRA tax systems. This enhances tax compliance among taxpayers and reduces possible avenues for tax evasion. The study recommends that KRA should address the complexities of annual tax returns, periodic variations in the tax laws, and levels of penalties and fines. It also recommends that the Government should ensure provision of high speed internet facilities in the rural towns to facilitate the filling or online tax returns.
Keywords: Kenya Revenue Authority (KRA), ICT knowledge, VAT.
Title: Effects of iTAX System on Compliance of VAT Payments by SMEs in Kenya: A Case Study of Wote Town in Makueni County, Kenya
Author: Munyoro Githaiga Paul
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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