BEYOND DIGITIZATION: ASSESSING THE EFFECT OF ELECTRONIC TAX INVOICE MANAGEMENT SYSTEM ON REVENUE PERFORMANCE OF KENYA REVENUE AUTHORITY
BEYOND DIGITIZATION: ASSESSING THE EFFECT OF ELECTRONIC TAX INVOICE MANAGEMENT SYSTEM ON REVENUE PERFORMANCE OF KENYA REVENUE AUTHORITY
Bernard Odadi - Student, School Business, Economics and Tourism, Kenyatta University, Kenya
Dr. Salome Musau - Senior Lecturer, Department of accounting and Finance, Kenyatta University, Kenya
ABSTRACT
Kenya Revenue Authority (KRA) has faced challenges that have hindered performance, with reports showing declining revenue collection targets and raising stakeholder concerns. In 2022/2023, KRA under delivered its Kshs.2 Trillion target, collecting Kshs.1.8 Trillion, exposing inefficiencies in tax collection. With compliance at just 20%, revenue mobilization remains a challenge. KRA’s 2023/24 goal of 2.03 trillion fell short, yielding 1.88 trillion, a 7.3% underperformance. The informal sector, constituting 80% of the economy, remains largely untaxed. This study therefore investigated effects of electronic tax invoice management system on revenue collection efficiency of KRA. Specific objectives included examining the impact of tax invoice data storage, invoice verification and authentication, VAT compliance, and electronic tax return filing, as well as the moderating role of taxpayer education. Resource-based view, technology acceptance model and systems theories rooted this examination, which embraced descriptive design focusing on KRA headquarters in Nairobi. Respondents were 3,278 employees across six cadres forming target population, with 357 as sample obtained by stratified random sampling. Structured questionnaires amassed primary data, while secondary data on revenue growth (2020-2025) was sourced from KRA. A pilot study of 37 questionnaires preceded the main survey, from which they were excluded. Data were analyzed using descriptive statistics (frequencies, percentages, means, and standard deviations) and inferential statistics (correlation, multiple regression). Findings uncovered tax invoice data storage, invoice verification and authentication, VAT compliance, and electronic tax filing all positively and significantly affect KRA revenue performance. Furthermore, taxpayer education significantly enhances (moderates) the effectiveness of ETIMS, implying that the integration of technology and taxpayer awareness programs is essential for maximizing revenue performance. KRA is accordingly recommended to adopt full integration that combines technological improvements in ETIMS with continuous taxpayer education initiatives. This integrated strategy will maximize compliance, reduce tax evasion, and significantly improve overall revenue performance.
