The new world order is one where the flow of external resources especially to emerging economies such as Kenya is shrinking. Indeed, the recent recession in developed countries was a wakeup call to many that the expected resources could one day dry up. This is happening when the need for support is increasing, hence, the need to become self sustainable and to increase the level of resources that can be raised domestically.
Domestic resource mobilization (DRM) refers to the savings and investment generated by households, domestic firms, and government. The need for African countries to mobilize domestic resources as a medium-to long-term goal is now widely accepted. In the past, Africa has been rated poorly as relates to saving and investment. A sustained increase in growth rates require higher level of savings and investment, as well as increased investment productivity. Developing countries and those in transition are at present confronting unsustainable fiscal deficits; unabated debt service charges and declining external assistance, seriously affecting their development process. Domestic tax revenues are the most sustainable source of financing for public expenditures in developing countries. The experience with domestic resource mobilization of developing countries over the last 25 years has been mixed. In countries such as Botswana, Israel, Kuwait and Seychelles, the central government revenue’s share in GDP has been more than 40 percent on average. The issue of tax compliance is extremely important both to those concerned with the key role increased tax yields can play in restoring macroeconomic balance and to those concerned with tax policy and its effects on the economy in general. However, the ability of developing countries’ governments to raise direct tax revenues is constrained by a number of external and internal factors. [...]
Inhaltsverzeichnis (Table of Contents)
- CHAPTER ONE: BACKGROUND
- 1.1. Introduction
- 1.2. Domestic Resource Mobilization
- 1.3. The Concept of Tax Compliance
- 1.4. What is the Problem?
- 1.5. Objectives of the Study
- 1.6. Rationale of the Study
- CHAPTER TWO: DEFINITION OF VARIOUS TAX HEADS
- 2.1. Income Tax
- 2.2. Value Added Tax (VAT)
- 2.3. Excise Duty
- 2.4. Trade Taxes
- CHAPTER THREE: REVENUE COLLECTION TRENDS IN KENYA
- CHAPTER FOUR: STUDY FINDINGS
- 4.1. Forecasting and setting of Revenue Targets in Kenya
- 4.2. Measuring the Tax Gap/ Tax Effort of Each of the Tax Heads
- 4.3. Impact of Underground Economy on Kenya’s Revenue Potential
- 4.4. The Impact of Taxpayer Behavior on Revenue Potential
- 4.5. Transfer Pricing and Revenue Potential
- 4.6. Impact of Tax Incentives on Revenue Potential
- CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS/ WAY FORWARD
- 5.1. Overview of the Study
- 5.2: Recommendations/Way Forward
- Annex 1: Analysis of Tax Gap: The Kenyan Case
- Annex 2: Value Gap of Pharmaceuticals and Petroleum for 2007
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This policy working paper examines the revenue potential in Kenya and seeks to identify ways to enhance domestic resource mobilization. The paper analyzes various factors influencing revenue collection, including the tax gap, the impact of the underground economy, taxpayer behavior, transfer pricing practices, and the effects of tax incentives.
- Revenue forecasting and target setting
- Tax gap analysis and compliance levels
- The impact of the underground economy on revenue collection
- Taxpayer behavior and its influence on tax compliance
- The impact of transfer pricing and tax incentives on revenue potential
Zusammenfassung der Kapitel (Chapter Summaries)
Chapter One provides an overview of Kenya's fiscal policy paradigm, highlighting historical trends in revenue mobilization and the country's reliance on external resources. It introduces the concept of Domestic Resource Mobilization (DRM) and its significance in achieving development goals. The chapter also delves into the concept of tax compliance, outlining different categories and identifying factors influencing taxpayer behavior.
Chapter Two defines various tax heads in Kenya, including income tax, Value Added Tax (VAT), Excise Duty, and trade taxes. It provides detailed descriptions of each tax category, including their scope, tax rates, and administrative procedures.
Chapter Three examines revenue collection trends in Kenya, analyzing data from 1995 to 2009. The chapter discusses the composition of government revenue, highlighting the proportions of various sources, including ordinary revenue (mainly taxation) and Appropriations in Aid (A-in-A).
Chapter Four presents the study findings, exploring key aspects of revenue collection and the factors impacting revenue potential. It includes an analysis of revenue forecasting and target setting, tax gap measurement, the impact of the underground economy, taxpayer behavior, transfer pricing practices, and the effects of tax incentives.
Chapter Five concludes the study, summarizing key findings and outlining recommendations for unlocking Kenya's revenue potential. It suggests strategies to address the tax gap, manage the underground economy, enhance taxpayer compliance, and improve the administration of transfer pricing and tax incentives.
Schlüsselwörter (Keywords)
The main keywords and focus topics of the text include Domestic Resource Mobilization (DRM), tax compliance, tax gap, underground economy, informal sector, taxpayer behavior, transfer pricing, tax incentives, revenue forecasting, and revenue collection trends. The paper explores these concepts within the context of Kenya's fiscal policy and examines their impact on the country's revenue potential.
- Arbeit zitieren
- Masinde Muyundo (Autor:in), 2012, Unlocking the Revenue Potential in Kenya, München, GRIN Verlag, https://www.grin.com/document/199589
