In a first, KRA surpasses Sh2trn revenue mark
Times Tower in Nairobi, the headquarters of the Kenya Revenue Authority.
Snooping on people’s data held by Kenya Power, water companies, banks and import agencies enabled the taxman to surpass the Sh2 trillion mark in the country’s highest annual revenue collection ever.
The Kenya Revenue Authority (KRA) said utilising various databases to pursue suspected tax cheats saw at least 17,038 evaders voluntarily come forward to pay dues, as others were netted, growing revenues by Sh362 billion in 2021/22, to hit Sh2.031 trillion.
“The extensive use of data and intelligence to unearth unpaid taxes has led to improved voluntary compliance and tax base expansion. The authority is permitted by law to utilise various databases to pursue suspected tax cheats, among them bank statements, import records, motor vehicle registration details, Kenya Power records and water bills, among other data,” KRA stated.
The Sh2.031 trillion 2021/22 annual revenue reported by the KRA was an improvement on the Sh1.669 trillion recorded in 2020/21, and surpassed the target of Sh1.976 trillion by 2.78 per cent.
Surpassed original target
“This is the first time the authority has surpassed its original target in 14 years (since FY 2007/08) after the previous target revisions were adjusted downwards,” said KRA Commissioner-General Githii Mburu.
The authority collected Sh1.297 trillion in domestic taxes, a surplus of Sh30 billion; customs and border control collections rose by 16.6 per cent compared to last year to Sh728.5 billion and petroleum taxes grew by 9.4 per cent to Sh247.9 billion.
The growth in petroleum revenues by about Sh20 billion compared to FY2020/21 came after Kenyans endured one of the most difficult years economically, as fuel prices rose to hit Sh160 for a litre of petrol and Sh140 for a litre of diesel, by June 2022.
Corporation tax grew by 32.7 per cent over the last financial year to Sh242 billion, with KRA citing increased remittance from finance, insurance, manufacturing, wholesale, retail and transport sectors.
Rising costs
Most of those sectors have, however, been complaining about rising costs of importing and producing goods, with the manufacturing sector in particular complaining of being overtaxed.
As manufacturers called on the government to consider reducing some taxes, operators in the transport sector have passed on such extra costs as high fuel prices to consumers.
Citizens have also been forced to buy basic commodities at some of the highest prices this year, with inflation hitting 7.9 per cent in June, to break Central Bank of Kenya’s (CBK) 7.5 per cent ceiling.
“Pay as you earn (Paye) registered a collection of Sh461.8 billion against a target of Sh455.1 billion. The performance was mainly driven by gradual recovery of the job market,” the authority stated.
Value Added Tax (VAT) collections grew by 24 per cent to hit Sh244.7 billion.
The KRA said increased VAT and domestic excise collections were as a result of its enhanced compliance efforts and “stringent enforcement against tax evasion focusing on curbing illicit trade and blatant non-compliance with tax laws by the players in the alcoholic and cigarette sectors.
“The performance is further anchored on the ongoing transformation at the authority, including the implementation of a high performance culture with stringent performance accountability as well as strict enforcement of tax laws in the fight against tax evasion,” Mr Mburu stated.
The authority says it has enhanced active surveillance and enforcement operations, reinforced by collaboration with a multi-agency team in fighting economic crimes.
“KRA has also partnered with other jurisdictions globally to exchange tax information. Kenya’s Exchange of Information (EOI) steadily increased from 73 in 2020 to 173 in 2021. Kenya also recovered Sh10.5 million in 2020 and Sh985.2 million in 2021,” the authority stated.
The taxman said enhancing surveillance has seen tax cheats coming forward through its Voluntary Tax Disclosure Programme (VTDP) to report previously undeclared taxes without being penalised.
“The programme was introduced vide the Finance Act, 2020, commenced on January 1, 2021 and shall run up to December 31, 2023. Under the programme, Sh8.546 billion in taxes was collected from 17,038 applications in the fiscal year. A total of Sh9.562 billion was applied for disclosure and waivers,” the KRA stated.
The authority now says the Tax Invoice Management System (Tims), which is currently being rolled out, will enhance tax compliance and close loopholes exploited by tax evaders.
“The system will help in standardisation and authentication of tax invoices at the time of generation by the trader and transmission to KRA on a real-time or near-real-time basis. It will also enable officers, traders and the public to verify the validity of a tax invoice through the invoice QR Code or Tax Invoice Checker on the iTax portal,” the authority stated.
