KRA targets Ksh.25 billion from tax-base expansion initiatives

The Kenya Revenue Authority (KRA) has set ambitious targets of netting Ksh.25 billion from its recent tax-base expansion initiatives as the tax man strives to meet its prescribed collections target.

Among the recently implemented initiatives to widen the tax base include the recruitment of landlords into the tax net and the reinstatement of turnover tax (TOT) on micro, small and medium enterprises with the first filing of the charge in the new era having fallen due on Thursday.

In an interview with Citizen Digital, KRA Commissioner for Domestic Taxes Elizabeth Meyo said the registration of new tax payers remains an ongoing process which will in the end pin point the ability of the tax man to grow revenues.

“We are still on with registrations. The numbers we currently have, visa-vis what we envisaged is progressive,” she said.

From a set target of Ksh.7.5 million in collections for January, the tax man has made the receipt of just under Ksh.5 million in fresh TOT collections for the month and is bound to incrementally adjust its targets progressively.

KRA resumed the collection of turnover taxes from businesses on January 1 following amendments to the 2019, Finance Act which reinstated the tax charged on businesses with an annual turnover of under Ksh.5 million at a rate of 3 per cent on sales.

The tax is now payable on every 20^th day of each month alongside the previously implemented presumptive tax — an advance tax offset from the TOT and charged at a rate of 15 per cent of the amount payable for a business permit.

Combined, the taxman hopes to pull in at least Ksh.3.3 million new tax payers to lift the tax base from the current 3.7 registered tax payers in the short-run.

Moreover, KRA will be relying on the segregation of taxpayers into minor groups including large, medium, small and micro tax payers to drive greater compliance.

KRA has for instance appointed a Chief Manager to manage micro taxpayers in a structure spread out across the country.

According to Commissioner Meyo, the reigning in of tax payers from the informal sector is primarily anchored on the simplification of processes.

“I do not expect a micro-enterprise to file an elaborate return as one done by a large taxpayer, neither would I expect them to keep similar sets of books,” she added.

The taxman hopes to drive simplicity through the switch to digitization with SMEs expected to account for their taxes via a mobile application generated filing.

KRA is under pressure to grow revenues with its target to June being set at a Ksh.1.83 trillion ceiling.

A slowing economic environment remains the greatest headwind to KRA ambitions with the tax man registering a Ksh.103.3 billion shortfall in seven months collections to January from lower yields from Value Added Tax (VAT) and Pay As You Earn (PAYE) tax heads.

Previous base expansionary initiatives have included the adoption of third-party data sources on taxpayers, the transformation of the iTax process and the on boarding of the regional cargo tracking system (RECTS).