KRA to station own staff in factories in plan to catch tax cheats
Manufacturers will no longer have the latitude to self-report their sales and remit proportionate levies to the exchequer as the taxman plans to station agents on site to monitor real-time activity in a move aimed to corner tax evaders.
According to internal National Treasury documents seen by Standard, the Kenya Revenue Authority (KRA) will station their staff in companies’ premises to observe goings-on and file reports.
“Going forward, KRA will address some of the challenges hampering enhanced tax compliance as follows… monitoring of excisable goods factories to ensure proper monitoring of production: under-declaration of excisable goods to evade taxes through the placement of resident officers,” reads one of the documents.
Manufacturing plants will also be required to establish command centres to carry out live production oversight using metering and monitoring tools.
The exchequer is turning up the heat on firms and citizens, aiming to broaden the tax bracket and tap more receipts as the cash-strapped National Treasury preps to dial back the debt component of the budget in the medium to long term.
News last week about KRA’s plan to track mobile money transactions by linking its system to telecommunication companies also to enforce tax compliance caused grave public disquiet, with many taking to social media to protest what they viewed as government overreach and violation of privacy.
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Earlier in the month, the taxman moved in on betting companies operating locally, plugging into their platforms to track the 15 percent tax on the industry and the 20 percent withholding tax on winnings collected from punters every day.
During the Public Sector Hearings for the 2023/2024 and Medium Term Budget on Jan 12, Kiharu MP and Ndindi Nyoro challenged the KRA to figure out ways to increase government revenue from the current 15 percent of GDP and match comparable economies like South Africa, whose taxes to GDP ratio is 28 percent.
“If you look at the revenues that we collect as a country, we are just around 14 to 15 percent of GDP, and therefore we are collecting around Kes2.1 trillion. If we were to collect the same percentage as our peers (economies that look like Kenya’s), who collect around 25 percent, we’d be collecting Kes3.5 trillion.
“If we were to raise revenues at levels of South Africa, which is around 28.6 percent, we’d be collecting Kes4 trillion. This is just trying to show that we have enough internal resources if we use GDP as a measure. We only need to streamline how we collect taxes [and] become more innovative because the opportunity is there,” said Mr Nyoro.