KRA to onboard informal sector players into the tax net

The Kenya Revenue Authority (KRA) is developing policies and measures to bring thousands of small-scale businesses and players in the informal sector into the country’s tax system.

The informal sector, mainly comprising SMEs, employs approximately 15 million people in Kenya, representing 83 percent of the country’s total labour force. KRA views this segment as having significant potential and aims to promote tax compliance within it.

During the 2023 Annual Tax Summit, KRA’s Commissioner-General, Mr Humphrey Wattanga, stated, “One of the initiatives under KRA’s tax base expansion programme is netting the informal sector into the tax bracket, the majority of whom are the MSMEs. This, therefore, informs the need to design strategies and policy interventions to enable KRA to tap this sector into the tax bracket.”

In an effort to boost revenue collection, KRA plans to collaborate with the National Treasury to establish policies that simplify, harmonize, and reduce the multitude of taxes applicable to the informal sector.

Read also: Inside KRA’s tax penalties and interest amnesty program

Educate traders

Mr Wattanga expressed confidence in these recommendations, stating that they would enhance voluntary tax compliance and support the country’s development goals. Additionally, KRA intends to educate traders about the importance of paying taxes.

At the same event, James Muhati, the Principal Secretary for Economic Planning, highlighted the importance of resilient tax systems in ensuring revenue recovery in the face of external economic shocks.

He emphasized that such systems must be adaptable to changing tax practices and evolving circumstances, both locally and internationally.

The PS pointed out that a well-designed system can address revenue shortfalls and contribute to a robust domestic resource mobilization agenda through policy reviews.

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