KRA bullish of topping revenue targets as reforms come full-circle


KRA office located at Times Towers in Nairobi
File photo of KRA headquarters located at Times Towers in Nairobi.

In Summary

  • The Kenya Revenue Authority (KRA) expects to hit its set targets in revenue collection as tax reforms and technological interventions in enforcement and mobilization come full circle
  • KRA is expected to raise Ksh.1.6 trillion in tax revenues by the June 30, 2019.
  • The taxman is under pressure to deliver on increased revenue collection as use of public debt to finance the budget becomes increasingly riskier.

The Kenya Revenue Authority (KRA) has expressed optimism of topping its revenue collection requirements in the medium term, this as the agency expect the raft of interventions meant at boosting revenue mobilization to take full effect.

The state agency is banking on the recently incorporated technological innovations to bridge the gap to optimal tax collection even as the full-circle implementation of the interventions remains to be seen.

KRA has for instance installed an intelligence gathering system for the anonymous record of tax transactions to go along the revamp of personal income-tax assessment to include third-party data from mobile-money services. Gains from the measures have however taken time be realized given the lengthy adaptability period.

“It’s one thing to implement technology and it’s another to be able to utilize that technology and see results. The reasons are still forward as one technology changes how people work resulting in a need to change work practices and work attitudes,” KRA Commissioner General John Njiraini told journalists during the launch of the agency’s 7th Corporate Plan on Wednesday.

KRA’s Integrated Custom Management System for example missed its expected roll-out in December 2018 due to challenges in its development. The system is, however, expected to come on board at the end of March this year to help seal leakages in revenue collection by nabbing excise duty cheats.

Interventions by the National Treasury to widen the tax base are likewise expected to come full circle starting this year as the full-implementation of the reforms take shape. The replacement of turnover tax (TOT) for businesses with annual yields below Ksh.5 million with a 15 percent presumptive tax based on business/trade licenses for instance began on the 1st of January 2019.

Other tax reforms undertaken by the National Treasury include the introduction of Value Added Tax (VAT) on petroleum products to the tune of 8 percent and the increase in exercise duty on mobile-money transfers.

“We undertake to work with KRA and all stakeholders to continuously develop appropriate policies and review of the regulatory regimes to meet the needs of all Kenyans,” said Treasury CS Rotich.

KRA is expected to raise Ksh.1.6 trillion in tax revenues by the June 30, 2019.

The agency has, however, consistently missed on its revenue mobilization obligations in the past few years only hitting such a milestone at the close of the 2010/11 . KRA is already running behind in revenue collection in the current financial year having missed the mark by Ksh.43.3 billion in the first five months to November 2018.

The authority has, however, seen growth in both compliance and revenue collection with the number of tax payers rising to 3.9 million in 2018 from 1.6 million in 2015. Revenue collected has similarly grown to surpass Ksh.4 trillion as the compliance rate hits 65 percent over a similar review period.

KRA is under pressure to deliver on increased revenue collection as use of public debt to finance the budget becomes increasingly riskier.

The taxman hopes to raise the revenue to GDP ratio from the current 18.3 percent to 19.2 percent in the 2020/21 fiscal year.

 

For Citizen TV updates
Join @citizentvke Telegram channel



Video Of The Day: | NEWSNIGHT | Punguza Mizigo, BBI or No Referendum?

Avatar
Story By Kepha Muiruri
More by this author