PATRIOTISM TAX

KRA pushes for turnover tax compliance

Majority of Micro and Small Enterprises (MSEs) also say they still do not understand ToT , calling for more public awareness

In Summary

•The first deadline was February 20 with KRA yet to analyse the final compliance rate

•Charged at three per cent of small businesses' monthly gross sales, the tax targets businesses with an annual turnover of less than Sh5 million

KRA has implemented the controversial three percent Turnover Tax targeting 2.5 million businesses in the informal sector.
Perspective: KRA hits informal sector with Patriotism tax KRA has implemented the controversial three percent Turnover Tax targeting 2.5 million businesses in the informal sector.
Image: Eric Thuo

Kenya Revenue Authority(KRA) has embarked on a public sensitisation campaign to rope more small traders into the Turn over Tax (TOT) platform, as businesses come to term with the levy.

This, even as it remains unclear of the compliance rate for the first month since the tax came into place.

The first deadline was February 20 with KRA yet to analyse the final compliance rate.

“Kindly note that registration process for Turn over Tax is an ongoing exercise,” KRA responded to inquiries by the Star.

“Payment of the taxes are due on 20th of every month. Traders are required to register on the iTax platform file and pay on 20th of every month.,” commissioner for domestic taxes Elizabeth Meyo said.

A spot check by the Star revealed that KRA might have missed its compliance target in the first month of implementation, as most small traders said they were struggling to keep records of their daily sales.

This has made it difficult to comply with turnover tax remittances.

Majority of Micro and Small Enterprises (MSEs) also say they still do not understand ToT , calling for more public awareness.

Charged at three per cent of small businesses' monthly gross sales, the tax targets businesses with an annual turnover of less than Sh5 million.

KRA has however said the TOT obligation is a simplified tax regime for MSEs allowing them to pay taxes through simplified processes.

“Under this simplified regime, taxpayers are not required to prepare complex account records,” commissioner domestic taxes Elizabeth Meyo notes.

The eligible taxpayers are only required to keep a daily gross sales record.

KRA has been consulting with concerned stakeholders to facilitate them to register and pay the taxes due, the authority said.

It said it has also simplified the registration, filing and payment process of TOT on the iTax platform.

The tax does not apply to persons registered for VAT, with business income of Sh5 million and above, employment income, rental income, limited liability companies, management and professional services among others.

KRA is counting on ToT among other strategies to increase its revenue collection and meet its targets which it has been missing in recent years.

The authority missed its half-year target for the 2019/20 financial year by Sh88.3 billion, netting Sh857.8 billion over the period.

This includes tax incomes of Sh779.3 billion ,45.7 per cent of the Sh1.7 trillion revised target for the current financial year, meaning the taxman is lagging behind his target.

Treasury has been pushing the taxman for more revenues to bridge budget deficit.

National Treasury CS Ukur Yatani says the taxman has to increase his collection to help meet government financial plans.

“They(KRA) should employ all measures so that what is supposed to be collected is collected in good time,” Yatani said.