KRA welcomes a simplified tax regime to revitalise revenue collection

Times Towers, Kenya Revenue Authority Head Office.
Times Towers, Kenya Revenue Authority Head Office.

The Kenya Revenue Authority (KRA) has welcomed a move by the National Treasury Ministry to simplify the country’s taxa system saying this will lead to a more comprehensive model which will culminate in better tax compliance.

KRA’s take come just days following the tabling of the 2018/2019 fiscal plan in the national assembly.

In the presentation to parliament, National Treasury cabinet secretary Henry Rotich proposed a raft of legal reforms which will enable KRA enhance revenue collection.

In the proposals, KRA is to cast a wider net in regards to arriving at a greater pool of revenue with the amendments calling for the introduction of a 15 percent presumptive tax on business licenses administered to setups in the informal sector.

Speaking during a post-budget stakeholder forum on Monday, KRA deputy commissioner for corporate policy Maurice Oray said the move by treasury fits the international set best practices enabling the authority to better reach the revenue collection targets as prescribed by government.

“The objective is to ensure that tax payers are able to comply without any problems. In addition to the legal reforms, we have also undertaken administrative reforms to address the loopholes that exist. Together with the legal reforms, we should be able to not only meet the set target but also surpass it,” Mr Oray said.

KRA head of market surveillance Caxton Masudi noted that there exists a lack of adequate enforcement laws to completely eradicate illicit trading which is one of the challenge curtailing efficiency in revenue collection.

Mr Masudi however noted that the proposed stringent measures could deter individuals from continued participation in the illegal trade.

“After fighting the illicit trade increasingly for close to one year the government has noticed weaknesses in the enforcement laws. For example, we have had problems with the penalties levied on persons that have been found importing illegal goods. For these we have introduced a penalty of Ksh5 million. For people producing illegally within the country, we have decided to confiscate all the equipment used in the process,” he said.

KRA is expected to overcome the challenges to hit the Ksh1.9 trillion mark in gross revenue collection by the end of the 2018/2019 financial year.

Amendments to the taxation policy are expected to increase net revenue collection by 17.5 percent from the current Ksh1.7 trillion target.

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