KRA recoveries from tax evaders rise to Ksh.8.5 billion


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

In Summary

  • The improved recoveries which represent a 60 percent increase from the Ksh.5.3 billion recovered across the preceding financial year come on the back on increased scrutiny on compliance by the tax man.
  • The Ksh.8.5 billion recoveries relate to 222 individual cases registered in courts entailing revenue implications estimated at Ksh.13 billion.
  • Of the 29 concluded cases, the tax authority has since gotten ruling on 26 suits to its favor resulting in a 90 percent success rate in its legal showdowns with tax evaders.

The Kenya Revenue Authority (KRA) has increased its recoveries from tax avoidance to Ksh.8.53 billion across the 2018/19 financial year.

The improved recoveries which represent a 60 percent increase from the Ksh.5.3 billion recovered across the preceding financial year come on the back on increased scrutiny on compliance by the tax man.

At the same time, the surge comes in the wake of the  2018 integration of a multi-sector approach by the government to nab tax evaders including the incorporation of the Kenya Bureau of Statistics (KEBS) and the Directorate of Criminal Investigations (DCI).

Further, KRA has enhanced its oversight measures having tapped largely on innovations in ICT to strengthen enforcement and oversight.

The Ksh.8.5 billion recoveries relate to 222 individual cases registered in courts entailing revenue implications estimated at Ksh.13 billion.

Of the 29 concluded cases, the tax authority has since gotten ruling on 26 suits to its favour resulting in a 90 percent success rate in its legal showdowns with tax evaders.

“There are quite a number of Kenyans not paying taxes including those who can’t pay, won’t pay. We now have informers, third party information from social media, departmental referrals from other agencies and even data from auditor general reports,” said KRA Deputy Commissioner for Investigations and Enforcement Edward Karanja. “You can run but you can’t hide.”

The introduction of enhanced screening to detect the concealment of goods on transit enhanced revenue collections from customs and border control by 11.8 percent exceeding the tax head’s three-year average growth trend of 9.5 percent.

Recoveries from tax cheats were highlighted notably by the netting of several high-end vehicles which landed at the port of Mombasa while disguised as basic household commodities.

KRA has pegged the netting of more tax evaders on the increased roll-out of innovative approaches to scrutiny including the recent roll-out of the Regional Electronic Cargo Tracking System (RECTS) alongside its regional partners to close loopholes emanating from the diversion of goods.

At the same time, the tax man is seeking to shift its legal focus to the acquisition of plea-bargains from tax evaders to ease its push towards full tax compliance.

“If a tax-payer can agree they are guilty as charged and comes to us in good faith, this would be one way of helping the tax cheats who want to change,” added Mr. Karanja.

Additionally, KRA has engaged the Chief Justice with view of establishing tax specific courts with the aim of fast tracking the prosecution of tax evasion related probes.

KRA has set its sights on the prosecution of 600 new tax-evasion linked cases in the current financial year while readjusting its recovery targets by further Ksh.5 billion to Ksh.15 billion to end in a 95 percent probing success rate.

Tax avoidance warrants tough sanctions including penalties amounting to double the tax liability for avoidance.

KRA’s push for 100 percent compliance rate from informants is in part boosted further by the informal reward schemes to individuals, calculated at the rate of five percent of total recoveries made to a maximum of Ksh.2 million.

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Story By Kepha Muiruri
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