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Effect of Tax Evasion on Revenue Collected at Customs, Border and Control Department of Kenya Revenue Authority

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  • Lucy Wanjuhi Ng’ang’a

    (Department of Diplomacy and International Studies, University of Nairobi, Kenya)

  • Martin Oleche Ouma

    (Department of Diplomacy and International Studies, University of Nairobi, Kenya)

Abstract

Efforts to curb tax cheating have not yet yielded 100% rewards. The taxpayers are daily devising new mechanisms of evading taxes. Tax comes in different ways and has been reported to cause indirect harm to the economy. The purpose of this study was therefore to investigate the effect of tax evasion on revenue collected at the customs, border, and control department of Kenya Revenue Authority. The study applied a descriptive research design. The study through purposeful sampling sampled 120 businesses from 7,431 businesses that are active in the export or importation of goods and clearing agents. The study applied the Taro Yamane formula to sample 162 respondents from a population of 1788 staff of KRA at the customs and border control department. Secondary data was collected using a secondary data sheet and covered a period between 2001 and 2022. Data for the study was analyzed through quantitative techniques (descriptive and inferential analysis). The results of the study were presented in tables. The study revealed that among the causes of tax evasion at the border included: High Tax Rates levied on goods and services, perception of high compliance costs, the complexity of the process of filing for duties and other fees, inadequacy of taxation services/support, ambiguity in tax laws and policies and low tax education among taxpayers. the study further revealed that among the ways through which taxes were evaded at the border included: misdeclaration, undervaluation of goods smuggling of goods, classification of imported goods as raw materials, and tariff misclassification. The study concluded that tax evasion significantly and negatively affected the tax revenues collected at the customs, border, and control departments. The study recommended the hiring and development of staff working at the customs border and control department to be able to carry out frequent tax audits and inspections of goods that are imported or exported to curb tax evasion. The study recommended that the KRA allocate resources to acquiring the latest information communication and technology gadgets including scanners to help in curbing tax evasion because it had a negative effect on the tax collected. In addition, the tax department should invest in educating the taxpayers on the importance of paying taxes, how to file for taxes, and when to file to reduce tax evasion. The study also recommended a strengthened one-stop-border post policy to help in reducing tax administration costs.

Suggested Citation

  • Lucy Wanjuhi Ng’ang’a & Martin Oleche Ouma, 2023. "Effect of Tax Evasion on Revenue Collected at Customs, Border and Control Department of Kenya Revenue Authority," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(10), pages 1994-2003, October.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:10:p:1994-2003
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    References listed on IDEAS

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    1. Letizia S. Di Mauro & Alessandro Pluchino & Alessio E. Biondo, 2019. "Tax evasion as a contagion game: evidences from an agent-based model," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 92(5), pages 1-12, May.
    2. O.V. Kostina & E.N. Razdrokov & V.V. Korosteleva, 2018. "Economic and Legal Assessment of Tax Evasion Countermeasures," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 717-726.
    3. Armenia ANDRONICEANU & Rodica GHERGHINA & Marilena CIOBANA?U, 2019. "The Interdependence Between Fiscal Public Policies And Tax Evasion," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2019(32), pages 32-41, June.
    4. Serhii Minchenko & Olena Oliinyk & Andrii Borovyk, 2018. "Tax Avoidance As A Threat To Economic Security: Ways And Methods Of Counteraction (Domestic And Foreign Experience)," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(3).
    5. Nurkholis Nurkholis & Muh Dularif & Ni Wayan Rustiarini, 2020. "Tax evasion and service-trust paradigm: A meta-analysis," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1827699-182, January.
    6. O.V. Kostina & E.N. Razdrokov & V.V. Korosteleva, 2018. "Economic and Legal Assessment of Tax Evasion Countermeasures," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 717-726.
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