EFFECT OF TECHNOLOGICAL REFORMS ON TAX REVENUECOLLECTION IN KENYA

Abstract

Upgrading to digital platforms through tax technological reforms is the primary initiative aimed at
replacing manual processes with automated systems, enhancing policy compliance, streamlining
operations and reducing tax evasion by Kenya revenue authority. This study sought to explore
whether the tax technological reforms implemented by the Kenya Revenue Authority (KRA) led to
increased revenue collections in the economy. The study focused on the effect of tax invoice
management system (TIMS) on revenue collection that was implemented during the period
2018/2019-2022/2023. The study was based on optimal taxation theory and Adam’s canons of
taxation theory. The study applied casual quantitative research design. The study relied on secondary
data that was collected by the researcher for a period of five- year duration (2018/2019-2022/2023)
from the Kenya revenue authority and Kenya National Bureau of Statistics. The data was analyzed
using time series analysis and percentages. The study findings established that annually revenue
collection remain stable for the period before the implementation of TIMS (year 2018/2019 and
2019/20). Thereafter, the revenue collection increases significantly during and after the
implementation of TIMS (year 2021/22 and 2022/23). This implies that TIMS’s implementation led
to an increase in revenue collection for the periods during, and after the implementation. The study
concluded that for a country to enhance revenue collection tax technological reforms are inevitable,
and that there is need to digitalize its system. Based on the findings, it is recommended that more
training and marketing of the electronic system should be done by Kenya revenue authority to ensure
that taxpayers embraces the system. The government should also improve connectivity to enhance
compliance among small taxpayers. Further research should be conducted by future researchers on
other tax reforms that influence revenue collection in Kenya and how different sectors, like
agriculture, services, and manufacturing respond to tax technological reforms.