EFFECTS OF ICT SUPPORT SERVICES ON REVENUE COLLECTION

EFFECTS OF ICT SUPPORT SERVICES ON REVENUE COLLECTION [CASE STUDY OF ENYA REVENUE AUTHORITY]

Code No: 861449

₦5,000.00

ABSTRACT

Over the years, The Revenue Authority (KRA) revenue collection has increased from its inception, accounting for over 93% of total government revenue. The impetus of the study is based around three relevant theories; institutional theory, change management theory and theory of systems. The challenges affecting revenue collection are over employment leading to supervision problems and budget constraints, non-payment of taxes by local community, administrative problems like corruption and lack of enforcement on revenue collection by local authorities, lack of administrative capacity to fully tap revenue sources among others. The main aim of the study was to explore the effects of ICT support services on revenue collection at KRA. This study used a descriptive survey research design. Primary qualitative data was used in this study specifically by use of interview guide.

It was collected from all the six departments at KRA. Interviews were conducted from 6 selected departments where each department two employees were selected in the top management category to be precise the commissioner and deputy commissioner. Data collected was purely qualitative in nature therefore content analysis was used for data analysis since it involves discussion and was presented in prose. The study findings revealed that ICT support services have greatly influenced the revenue collection at KRA. This has been made possible by the strategies that the organization has put in place over the years by modernisation of revenue collection system through the introduction of iTax platform, I Customs, ICMS, manifest management system all these have aided in the automation of customs procedures.

The study further concludes that automation of revenue collection processes offers great deal of significant management since it facilitates effective access to services and provides convenient and fast customer feedbacks. The study concludes that the level of compliance has increased among the tax payers due to the strategies that KRA is putting in place such as ensuring all companies registered obtain a PIN, all employers during recruitment process to enquire for tax compliance certificates, blocking of tax defaulters and also opening of service agents who can handle customers conveniently at different localities not necessarily at KRA offices like Huduma Centres.

ICT development is of core importance to many organizations in need of growing successfully and improves efficiency in operations and in serving clients. More training on the reforms and modernization at KRA should be enhanced so as to improve on the skills, knowledge and professional capacity of the employees to increase revenue. In addition, more revenue collection centers need to be established since they have been effective in enhancing financial performance by the Authority. Given that the study focused only on strategic effect of ICT support services on revenue collection based on primary qualitative data (interview guide) and focused on the management employees only, it is recommended that a similar study on the effect of ICT support services on revenue collection at KRA be undertaken to include other employees and tax payers as well. The study also recommends that another study can be carried out using other methods of data collection such as questionnaires to cater for large population and secondary data to cater for factual data on performance.

CHAPTER 1

1.1 Background of Study

Organizations today have increasingly become aware of the importance of strategic management. This awareness in a system is a critical dimension in the performance of organizations. The actual incidents validate the assumption that despite how sophisticated and modern the business actions of the organization may become, it will be really hard to maintain its growth and effectiveness except if there are strategies that harmonize its operations. According to Wright (2010) “the frequent and uncertain changes, greater competition between firms, the need for continuous innovations, quality enhancement and cost reduction force companies to face the challenge of improving their competitiveness and consequently their performance”. This recognition has pushed strategic management as a key field of study and the restored interest has assisted in the growth of new approaches in running of organizations. The concept of the strategic management thus covers organization-wide issues in the context of a whole range of its operational influences. According to Pearce & Robinson (2009) “strategic management is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives and allocating resources so as to implement the plans”. By practicing effective strategic management organizations seek to reposition themselves in order to create new competences and capacities to exploit and deal with new situations and this is made possible through provision of overall direction to the organization by the top management.

Lately Kenya Revenue Authority (KRA) has advanced into recent and wholly integrated revenue administration agency. Tax collection has been on the increase since its inception and caters for over 93%of total government income. Kenya Revenue Authority plays critical roles in facilitation of trade and investments, protection against banned and illegal goods and promoting national security at large. This success is largely attributed to development and execution of strategic planning process and performance management systems. Taxation can be defined as the obligation by government of compulsory levies and contributions on the general public, assets, income, merchandise and business transactions, with an aim of raising government income or revenue for expenditure. The collection of tax revenue is made possible by the government?s statutory organization, Kenya Revenue Authority (KRA). The major reasons for Kenya to enforce taxation include; to collect monies for financing societal services such as health, national security, education and infrastructural developments; secondly, to increase the money sent or catering for the poor; to promote investments; and to protect local markets on domestic products through heavy taxes on unnecessary imports (KRA, 2012).

The Kenyan taxation system is built on three important components; namely tax policy, tax law and tax administration. Tax administration incorporates a set of activities in ensuring that tax is levied based on relevant tax laws and sanctions applied where appropriate. It comprises three interrelated functions, namely; identification of tax liabilities, the collection, prosecution, and penalty activities (KRA, 2012). KRA gets its revenue from the taxes, therefore to ensure a success in this procedure, the tax authorities ought to receive internal support. Thus, the study seeks to investigate the perceived effect of ICT support services on tax collection.

According to Norton (2006) “the of goal Information Systems, was not only to provide citizens, economic organizations, companies and institutions with a range of excellent and effective services, but they also created a new form of citizenship based on the participation of all individuals in the provision of services and the decision- making process which was aided by the intensive use of new Information and Communication Technologies” (Norton, 2006; 25).

The impetus of the study was based around two relevant theories; Institutional theory, which explains how institutional environment can objectively influence the interaction between departments in the organization to promote effectiveness in revenue collection and the theory of systems which views organizations as systems need to interact with the environment or other organs of the organizations to ensure certain objectives are met.