The Kenya Revenue Authority (KRA) has announced that it will link its system to telecommunication companies to increase tax compliance and reach its Sh3 trillion tax collection target for the 2023/2024 budget.
The taxman says the plan to link its tax collection system to mobile financial platforms will allow KRA to access till and pay-bill accounts of traders to weed out cheats.
Furthermore, this move will enable the KRA to track the 16 per cent value-added tax (VAT) on sales and the 20 per cent excise duty charged on mobile money transactions. KRA has flagged mobile telecom operators for possible under-declaration of airtime, Internet and mobile money transaction sales as it seeks to monitor the firms’ revenues on a daily basis.
KRA commissioner-general Githii Mburu said the telcos are the next stop for integration of tax systems after a successful pilot with betting firms.
“Telcos pay a significant amount of taxes, but we believe there’s much more opportunity and scope if we are to integrate and monitor that on a daily basis using technology. We are also going to receive taxes daily from those telecommunications companies and ensure we have the full scope of transactions in that space,” Mr Mburu said on Thursday as quoted by the Business Daily.
“Once we make sure we have that full scope and we are not relying on the self-declarations, then we are sure we will be collecting the right amount of taxes.”
The government plans to increase tax collection by 17 percent to Sh2.57 trillion in its fiscal year starting in July, the Treasury said.
Use of Mobile Money
“We are also going to use that data to now focus on other businesses and individuals that have been making money…[but] have been escaping our dragnet. So we will also be focusing on the till and pay-bill numbers, and every other transaction in the digital space that we ought to be collecting taxes on,” said Mburu.
The chief taxman did not disclose the target month for the planned inter-linkage with telcos. However, he made it clear the real-time monitoring of the transactions and daily remittances will be key in achieving the revenue target of Sh3 trillion to fund Dr Ruto’s first budget for the year ending June 2024, hinting it could start next financial year.
“We are doing everything possible to ensure that we surpass our target by a significant margin to ease the pressure on our borrowing,” Mr Mburu said.
“We are working very hard and we have full government support for that. His [Dr Ruto’s] messaging has been very clear that we must collect every shilling so that we can ease the pressure from debt.”
With the ongoing digitalisation of government services and integration of KRA systems onto telecoms, betting and other SMEs there is no chance for you to evade tax.
Additional reporting from Business Daily.