The Relationship Between Automation and Revenue Collection by Kenya Revenue Authority

Abstract

The modernization of the global tax system has been driven by efforts to enhance the accountability and efficiency of taxation systems. Despite the implementation of iTax in Kenya, the Kenya Revenue Authority faces challenges in meeting its revenue targets. This study aimed to assess the five-year impact of iTax implementation on revenue collection in Kenya. Drawing on the Unified Theory of Acceptance and Use of Technology and Neo-Classical theory, the research utilized a longitudinal correlational design to investigate the effects of iTax. Analyzing secondary data from tax collections between 2012 and 2016 using event study methodology and quantitative statistical packages, significant changes in revenue patterns linked to iTax implementation were identified. Remarkably, iTax contributed to heightened variability in revenue returns, exerting a positive influence on average quarterly revenue collection. Specifically, the study noted no substantial difference in revenue collected in 2012 and 2013, signifying a stable pre-iTax period. However, during the iTax implementation phase, a noteworthy increase in revenue was observed, a trend that persisted post-implementation. Post-iTax, abnormal revenue exhibited a considerable rise (M=0.8460 billion, SD=0.33091) compared to the pre-iTax period (M=0.00001, SD=0.17142), emphasizing the favorable impact of iTax on revenue collection. In conclusion, the implementation of iTax has positively impacted revenue collection in Kenya, emphasizing the need for strategies to promote taxpayer adoption. The study recommends that the Kenya Revenue Authority concentrates on training and marketing initiatives to further boost iTax adoption, ensuring sustained revenue growth in the future.