Forecasting Domestic Tax Revenues in Kenya Using Sarima & Holt-Winters Methods

  • Micheni Nelson Kirimi Postgraduate Student, Department of Mathematics and Statistics, University of Embu, Embu, Kenya
  • Atitwa Edwin Benson Senior Lecturer, Department of Mathematics and Statistics, University of Embu, Embu, Kenya
  • Kimani Patrick Senior Lecturer, Department of Mathematics and Statistics, University of Embu, Embu, Kenya
Keywords: Kenya Revenue Authority(KRA), Domestic Taxes Revenues, Holt-Winters (HW), Seasonal Autoregressive Integrated Moving Average (SARIMA)

Abstract

Forecasting of tax revenues is an important factor in fiscal planning. Underestimation and overestimation of tax revenues lead to unstable economies. The study sought to find suitable Holt-Winters and SARIMA models that could be used to forecast Domestic tax revenues in Kenya. The study utilized the Domestic tax revenues collected in Kenya between Jan 2015 to December 2020. Analysis of data was done using R-software (version 4.1.0) where SARIMA and Holt-Winters time series forecasting methods were applied to the revenue data. SARIMA(0,1,1)(0,1,1)[12] model was found to be the best model since it had the least Bayesian Information Criterion (BIC=1236.49) and least forecasting errors (MAPE=6.9, MASE=0.37).The multiplicative Holt-Winters method was slightly superior to the additive method due to its lower error (MAPE=7.43). The study recommends the use of the two methods to forecast Domestic taxes in Kenya be used to capture the Domestic taxes revenues with high precision.

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Published
2022-10-04
How to Cite
Nelson Kirimi , M., Edwin Benson , A., & Patrick , K. (2022). Forecasting Domestic Tax Revenues in Kenya Using Sarima & Holt-Winters Methods. International Journal of Information Management Sciences, 6(1), 50-59. Retrieved from https://ijims.org/index.php/IJIMS/article/view/153
Issue
Vol. 6 No. 1 (2022): International Journal of Information Management Sciences (IJIMS)
Section
Articles

Copyright (c) 2022 SettingsMicheni Nelson Kirimi, Atitwa Edwin Benson, Kimani Patrick

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