Effect of Automation on Tax Compliance Among Residential Property Owners in Thika Town

Abstract

Kenya, like many other African nations, has a problem with low tax compliance in the rental industry. The heightened utilization of technology in tax administration poses several obstacles for landlords who may lack familiarity with the KRA's latest computerized tax platform. Therefore, the intricate nature of the tax system occasionally affects compliance of this group of taxpayers. This study's primary objective was to explore how tax operations automation affects compliance among Thika town's residential property taxpayers. Among the specific objectives were to ascertain the impact of i-tax registration on tax compliance, investigate the impact of i-tax filing returns on tax compliance, and examine the impact of i-tax payment on tax compliance among residential property taxpayers in Thika town. Fiscal exchange theory, optimal tax theory, and the technological adoption model were all used in the study. The target population was 200 residential rental property owners in Thika town, with the study adopting descriptive research approach. The Yamane method was utilized to determine the sample size of 133 participants using a simple random sampling technique. Excel worksheets and SPSS software were used to examine quantitative data using both descriptive (frequencies & percentages) and inferential (multiple linear regressions) statistics. Tables and figures were used to display the quantitative data. Thematic content analysis was used to assess the qualitative data, and narratives were used to present the findings. The results demonstrated that tax compliance among Thika town's residential property business owners has been significantly impacted by the automation of KRA's tax administration systems and procedures. The findings further indicated that i-tax registration, i-tax filing returns, and i-tax payment have improved registration as taxpayers, filing of returns online, and payment of taxes using e-tax systems. Inferential statistics revealed that i-tax registration (β1=0. 353, p=0.000<0.05), i-tax filing returns (β2=0. 299, p=0.003<0.05), and (β3=0. 342, p=0.001<0.05), each had a significant influence on tax compliance among the residential property taxpayers in Thika town. These findings are expected to provide valuable insights for tax authorities and policymakers that aim to enhance tax compliance through technology advancements. Therefore, based on the findings, the following recommendations were given: the KRA should strengthen its digital infrastructure to ensure smooth-running of its system for easier i-tax registration, payment and filing of returns. There is also need for KRA and the government to enhance taxpayer education and awareness so that potential taxpayers can understand the role and functionality of i-tax system. Simplification of user interface and processes will also be very critical for KRA.