Judicial and revenue officers involved in the investigation and prosecution of tax evasion offences will be exempted from exposing whistleblowers, if Parliament approves proposed changes to the law.
The government, in the financial year 2022/23 Finance Bill, has proposed amendments to Section 133 of the Evidence Act to protect all officers involved in administering tax laws as part of a strategy to reinforce the fight against tax cheats.
“No judge, magistrate or police officer shall be compelled to say whence he got any information as to the commission of any offence, and no revenue officer shall be compelled to say whence he got any information as to the commission of any offence against the law relating to the public revenue or to income tax, customs or excise,” the Finance Bill states.
“For the purposes of this section, ‘revenue officer’ means any officer employed in or about the business of any branch of the public revenue, including any branch of the income tax, customs or excise departments,” it adds.
In his budget speech on Thursday, Finance CS Ukur Yatani announced several measures aimed at tightening the noose on tax cheats.
He, for example, proposed more powers to the Kenya Revenue Authority (KRA) to freeze and seize additional assets such as cars, ships and planes of wealthy tax cheats.
This, he said, would widen the range of assets that can be frozen by the KRA beyond land.
The CS said it had been noted that although the taxman had mainly focused on land deals to recover tax arrears, some individuals took advantage of a loophole in the surveillance on other asset transactions to escape the dragnet. The Tax Procedures Act empowers the commissioner-general of the KRA to issue directions to the Land Registrar to put a caveat on land or restriction on the transaction for taxpayers with tax arrears.
“It is noted that a taxpayer may have other assets other than land which the commissioner can put caveat or restriction on transfer to secure unpaid tax revenue,” Mr Yatani said in his budget speech for the fiscal year 2022/2023.
“In this respect, I propose to amend the Tax Procedures Act to require registrars of ships, aircraft, motor vehicles, and any other properties that may be used as security for unpaid taxes to restrict disposal or transaction of these assets upon receipt of direction from the commissioner” he added.
This comes as KRA has rolled out a series of new tax surveillance systems that will hand the state real-time access to financial data, including sales returns, for scrutiny.
For instance, to tighten supervision, the taxman announced the installation of flow meters and CCTV cameras in alcohol factories – guaranteeing the state round-the-clock information on the operations of manufacturers to curb tax evasion.
KRA also announced all electronic tax registers (ETRs) to be connected to its systems for monitoring daily sales.
The two systems will give KRA a view of goods as they leave the production line to the point of exchange between retailers and consumers, collecting what is due at each point along the supply chain.
The CS at the same time said Kenya would enforce a new tax information sharing deal known as the Multilateral Convention for Mutual Administrative Assistance in Tax Matters (MAC) with the Global Forum on Transparency and Exchange of Information on Tax Matters in July 2020.
