Tax Evasion Risks in Kenya: The Paradoxical Effects of Blockchain Technology

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Published Oct 28, 2025
https://doi.org/10.70907/khyw6p34
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Vol. 19 No. 10 (2025): Research Beacon Journal

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Davine Ndanu Mue
Moi University
Dr. Irungu Macharia
Moi University
Dr. Japheth Kogei
Moi University

Abstract





Tax evasion remains a critical challenge in Kenya, undermining government revenue and fiscal sustainability. Traditional tax systems often lack transparency and are prone to inefficiencies and fraud, creating avenues for non-compliance. Blockchain technology characterized by transparency, data security, decentralization, and smart contracts offers a promising solution to enhance tax administration. However, limited studies focus on blockchain’s application in Kenya’s tax system, particularly at the national level, creating a significant research gap. This study investigated the effect of blockchain technology on tax evasion risks in Kenya, focusing on four dimensions: transparency, data security, smart contracts, and decentralization. The study was anchored on the Technology Acceptance Model and the Diffusion of Innovation Theory, while Agency Theory complemented these by addressing accountability dynamics in tax administration. The study adopted a descriptive and explanatory research designs and targeted 318 employees drawn from the Intelligence Strategic Operations Department and the Strategy, Innovation & Risk Management Department of the Kenya Revenue Authority (KRA). A sample of 253 respondents were selected using stratified random sampling based on Yamane’s formula. Primary data was collected through structured questionnaires and analyzed using descriptive statistics and inferential techniques, including correlation and multiple regression analysis. Out of the 253 questionnaires distributed, 211 were returned, yielding a high response rate of 83.4 percent, which enhanced the reliability of the findings. The regression model produced an R Square of 0.776 and an adjusted R Square of 0.772, indicating that blockchain transparency, data security, smart contracts, and decentralization jointly explained 77.6 percent of the variation in tax evasion risks. ANOVA results showed that the overall model was statistically significant (F = 178.713, p < 0.001). Coefficient analysis revealed that all four blockchain dimensions had positive and significant effects on reducing tax evasion risks: data security (β = 0.361, p < 0.001), blockchain decentralization (β = 0.133, p = 0.001), blockchain technology transparency (β = 0.317, p < 0.001), and smart contracts (β = 0.200, p < 0.001). The study concludes that blockchain technology can substantially reduce tax evasion risks by enhancing transparency, strengthening data security, automating tax-related processes through smart contracts, and distributing control to prevent manipulation. Based on these insights, the study recommends that policymakers and tax authorities integrate blockchain technology into national tax systems to enhance transparency and build tamper-proof audit trails, strengthen data security standards and invest in cybersecurity infrastructure, enact legislation supporting the implementation and auditing of smart contracts, and encourage decentralized blockchain networks to reduce single points of failure and corruption.





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Author Biographies

Davine Ndanu Mue, Moi University

PhD, Kenya School of Revenue Administration

Dr. Irungu Macharia, Moi University

PhD, Kenya School of Revenue Administration

Dr. Japheth Kogei, Moi University

PhD, Kenya School of Revenue Administration

How to Cite
Mue, D. N., Macharia, I., & Kogei, J. (2025). Tax Evasion Risks in Kenya: The Paradoxical Effects of Blockchain Technology. Research Beacon, 19(10), 145-161. https://doi.org/10.70907/khyw6p34

How to Cite

Mue, D. N., Macharia, I., & Kogei, J. (2025). Tax Evasion Risks in Kenya: The Paradoxical Effects of Blockchain Technology. Research Beacon, 19(10), 145-161. https://doi.org/10.70907/khyw6p34

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