Be it electronic filing of income tax returns or use of electronic verification mechanism, be it quick processing of tax refunds or issuing of notices to those who have not filed their returns, it is the extensive use of technology which has emerged as the key trend. We expect to see intensive audit or scrutiny of returns getting done electronically. This will not only save time and effort but also help bring in transparency to the process. Will there be dispensation from filing of the tax returns? Well, this too may not be out of sight, particularly for those who have simple returns such as salaried individuals where taxes are deducted and deposited by the employer, or even for those having income from other sources where tax liability has been discharged through withholding by the payer of income. These measures will not only result in some ease to taxpayers, but also give more time to the authorities to focus on non-compliers. Those not filing the returns or entering into significant financial transaction, where the value of investment is not commensurate with their tax return, are likely to get noticed easily.
Kenya has recently joined the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information with a number of countries. Now bulk taxpayer information is expected to be periodically shared among those countries, thereby reducing the scope for someone to hide money overseas.
We expect a reduction in personal tax rates. Where government is able to expand the taxpayers’ base and strict compliances yield revenue growth, it may not be out of way to expect reduction in personal tax rates. Particularly when the present government may be looking to clinch another term in the next general elections. More focus on taxation of the informal sector is also expected. The concept of “fair taxation” where everyone pays their fair share of taxes is very important for influencing a positive taxpaying culture. There is no doubt that small and micro enterprises are vital to the economy as they account for a large proportion of the country’s labour force.
Time has come for taxpayers to comply fully with the law by paying taxes honestly and ensuring complete disclosures. They should also maintain and preserve documentation of financial transactions.