Implementation of Cooperative Compliance Programme in Africa: Which Way Forward for Kenya?

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Implementation of Cooperative Compliance Programme in Africa: Which Way Forward for Kenya?

Authors: Alex Oguso, Adrian Gitamo

ISSN: 2709-8575
Affiliations: Corresponding Author: Research Economist and Manager, Research and Tax Modelling Unit, Kenya Revenue Authority; Researcher, Surveys and Business Analysis Unit, Kenya Revenue Authority
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 208–234
https://doi.org/10.47348/AMTJ/V5/i1a10

Abstract

This study aims to establish the way forward for designing and implementing a cooperative compliance programme (CCP) for Kenya. Specifically, the paper seeks to examine the current relationship management framework in Kenya through the lens of a cooperative compliance framework and explore the strategic options for Kenya in designing a CCP to meet its specific needs. The study adopts a mixed research approach: desk research, key informant surveys and focus group discussions. The study identifies gaps in the current relationship management framework that need to be addressed. These included the need to fully understand the unique characteristics of large taxpayers and the context in which tax planning occurs; proper planning and coordination of tax audits by various departments; better handling of tax disputes (which should be centralised and well-coordinated); prompt refund payment; and effective engagement of taxpayers in the formulation of new tax policies and amendment of tax laws. Further, the study proposes strategic initiatives for the design and implementation of a cooperative compliance programme in Kenya. The study concludes by providing a way forward for Kenya, which includes a multi-stakeholder approach to designing a cooperative compliance programme, piloting the programme before full adoption, and implementing the programme through a phased approach.

The Impact of Tax Lottery Design on Tax Compliance: A Lab Experiment in Tanzania

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

The Impact of Tax Lottery Design on Tax Compliance: A Lab Experiment in Tanzania

Authors: Cyril Chimilila; Remidius Ruhinduka; Vincent Leyaro

ISSN: 2709-8575
Affiliations: Lecturer, Institute of Tax Administration, Tanzania; Senior Lecturer, School of Economics, University of Dar es Salaam; School of Economics, University of Dar es Salaam
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 235–253
https://doi.org/10.47348/AMTJ/V5/i1a11

Abstract

Low tax compliance undermines tax revenue mobilisation in developing countries. Various countries have adopted tax lotteries and rewards as alternative strategies to promoting tax compliance. However, there is limited empirical evidence on how best to design tax lotteries. This study used a lab experiment to study the effect of tax lottery design on compliance. The study used two lottery designs – a lottery of high reward and low probability and a lottery of low reward and high probability. The study found that there was higher compliance (85.2%) for the high reward, low probability lottery compared to the 81.9% for the low reward, high probability lottery; compliance in the control group was 69.8%. Using logistic regression, the study estimated the treatment effect. A lottery of high reward and low probability has a higher treatment effect: 0.1554 compared to 0.1341 for the low reward, high probability lottery. This study concludes that the design of lottery rewards has a significant effect on compliance. It contributes to the literature on the effect of tax lottery design on tax compliance and highlights the need for strategically designing tax lottery rewards to encourage higher compliance.

Leveraging Artificial Intelligence for Enhanced Tax Collection in Developing Nations: A Systematic Literature Review

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Leveraging Artificial Intelligence for Enhanced Tax Collection in Developing Nations: A Systematic Literature Review

Authors: Joy Mudome; Joshua Rumo A. Ndiege

ISSN: 2709-8575
Affiliations: Senior Business Systems Analyst, Kenya Revenue Authority; Assistant Professor, Information Systems at United States International University (USIU)-Africa
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 254–275
https://doi.org/10.47348/AMTJ/V5/i1a12

Abstract

The integration of artificial intelligence (AI) into tax collection processes has emerged as a transformative approach in improving efficiency, accuracy and compliance for national governments. Despite its potential, literature on AI’s role in tax collection, especially in developing countries, remains scarce. This paper makes a contribution to this area by conducting a systematic literature review aimed at investigating the current state of AI implementation in tax collection in developing nations and identifying future research opportunities. The review synthesises findings from twenty selected studies published between 2014 and 2024. The findings indicate that AI facilitates tax compliance through its capacity to automate repetitive tasks, enhancing data processing capabilities and detecting anomalies for targeted enforcement efforts. Moreover, AI tools offer potential in reducing tax evasion by enabling real-time transaction analysis and value chain analysis, closing taxation loopholes and improving fraud detection mechanisms. However, responsible AI use remains paramount, necessitating the establishment of ethical frameworks, transparency measures and mechanisms for accountability to ensure user data protection and adherence to societal norms and legal standards. By compiling insights from diverse studies, this work presents a unique perspective and paves the way for additional research in this emerging field.

Optimising Eswatini’s Value-Added Tax (VAT) Threshold: Balancing Revenue Efficiency and Compliance Costs

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Optimising Eswatini’s Value-Added Tax (VAT) Threshold: Balancing Revenue Efficiency and Compliance Costs

Authors: Masuku Phindile T; Mamba Lwemvelo

ISSN: 2709-8575
Affiliations: Manager Research – Research, Strategy and Statistics Division at the Eswatini Revenue Service; Senior Analyst – Research, Strategy and Statistics Division at the Eswatini Revenue Service
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 276–295
https://doi.org/10.47348/AMTJ/V5/i1a13

Abstract

Value-added tax (VAT), a consumption tax levied on value added at every stage of production in the value chain, was introduced in Eswatini in April 2012 to replace general sales tax (GST). At its introduction, it was set at a rate of 14%, and since 2012, the VAT registration threshold has been set at E500 000. However, due to inflation and the time value of money, E500 000 in 2012 is no longer the equivalent of E500 000 in 2024, hence the need to review and determine the optimal VAT threshold. This study uses a method based on the idea of collecting the most amount of VAT revenue from the least number of taxpayers to approximate the optimal level of a VAT threshold for Eswatini. This optimal level creates administration and compliance cost-efficiencies for both the tax administration and the taxpayer, respectively. The findings from the study show that the marginal changes to the number of registered taxpayers and the VAT to be collected from them converge at a VAT threshold in the range of E800 000 to E900 000 for Eswatini; at this level, 99% of VAT revenue collected comes from only 54% of VAT-registered taxpayers. Therefore, based on the methodology, the study recommends that the VAT threshold should be revised from E500 000 to E900 000 to allow for the cost-efficient collection of VAT in the country.

The Role of Electronic Tax Stamps System on Revenue Collection in Tanzania

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

The Role of Electronic Tax Stamps System on Revenue Collection in Tanzania

Authors: Innocent Nyamfulula; Cornel Joseph; August O. Kessy; Elly H. Mloso

ISSN: 2709-8575
Affiliations: Institute of Tax Administration, Tanzania Revenue Authority; Mkwawa University College of Education, University of Dar es Salaam; Institute of Tax Administration, Tanzania Revenue Authority; Institute of Tax Administration, Tanzania Revenue Authority
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 296–310
https://doi.org/10.47348/AMTJ/V5/i1a14

Abstract

This study examined the Electronic Tax Stamps (ETS) System’s role in revenue collection in Tanzania with a focus on cigarettes, beer and spirits. The results from a trend analysis show an increase in respective revenue in the immediate period after the introduction of the ETS system. Moreover, the estimated results from the regression with Newey-West standard errors show that the coefficient associated with the ETS is positive and statistically significant. Thus, the study concludes that ETS plays a critical role in improving excise revenue performance and fostering a more transparent and efficient fiscal system in Tanzania. The government and policymakers should continuous improvement of the ETS system so that it can contribute significantly to revenue collection. Also, the ETS System should be backed by a well-designed system of enforcement so as to realize a more positive contribution to revenue collection.