KRA eyes rich, digital market in 3-year Sh6.8trillion target

Expects to raise the number of active taxpayers by an additional two million.

In Summary

•Active taxpayers targeted at 8.2 million in the next three years.

•KRA also targets businesses in the Turnover Tax (ToT) regime, non-compliant businesses and professionals.

The KRA headquarters at the Times Towers.
The KRA headquarters at the Times Towers.
Image: FILE

Kenya Revenue Authority is targeting high net-worth individuals, the digital economy and real estate to raise Sh6.8 trillion in revenue over the next three years.

It also plans to expand its tax base by tapping businesses in the Turnover Tax (ToT) regime, non-compliant businesses and professionals, Commissioner General Githii Mburu has said.

The authority, while launching its eighth three-year Corporate Plan yesterday said it expected to raise the number of active taxpayers by an additional two million, from 6.1 million to 8.2 million in the next three years.

“We will expand the tax base by targeting sectors with potential for revenue growth,” Mburu said during the launch presided over by National Treasury CS Ukur Yatani.

The taxman is further banking on alternative dispute resolution and an elaborate trade facilitation programme to meet its target in the plan, whose implementation is expected to cost Sh117.638 billion.

In the financial year 2020/21, 393 cases were resolved through alternative dispute resolution and 914 cases over the last corporate plan, unlocking Sh38.9 billion.

During the next three years, KRA also plans to adopt modern technology and upgrade its systems to help mobilise more taxes.

“Keen focus will be the adoption of technology such as blockchain and artificial intelligence,” chairman Francis Muthaura said.

Through its Customs and Border Control Department, KRA will also focus on enabling trade across borders through facilitation of legitimate trade by effectively monitoring both land and sea borders, and strengthening the authority’s marine unit.

It further plans to improve pre-arrival cargo clearance using its Integrated Customs Management System (iCMS).

Yatani said there is need to bring the informal sector into the country’s formal tax base and reduce over-reliance on existing tax brackets.

“That is one critical area that we need to target. We should not be taxing the same people every other day. There is need to share the burden,” Yatani said.

Treasury expects KRA’s target to go up to Sh2.5 trillion by the 2023/24 financial year, from Sh1.77 trillion in the next financial year starting July 1 where betting firms are among the biggest target.

Sin-tax has traditionally been the go-to for taxes by the government.

“This, therefore, calls for innovative ways to mobilise revenues as the government seeks to implement tax policy measures that reduce tax burden on citizens,” Yatani said.

He said KRA should strengthen its strategic collaboration and partnerships with other government agencies, business organisation, private sector and Micro, Small and Medium Enterprises, with the aim of collecting tax or levies on their behalf.

In order to strengthen compliance and enforcement, KRA should simplify the tax processes, forms and technology links, and implement tax policy reforms to ensure stability and clarity of tax laws, the CS said.

He said it should also expedite the rollout of simplified online self-care services that will make it easy for stakeholders to comply.

The new plan comes after KRA successfully implemented its seventh corporate plan which saw revenue collected during the period grow 21 per cent to Sh4.8 trillion.

Despite the Covid-19 pandemic affecting revenues last year, the taxman has managed to beat monthly targets starting December, with hopes it will meet its targets going forward.

In the current financial year, the authority collected Sh1.131 trillion in 11 months to May 31, against a target of Sh1.469 trillion for the financial year ending June 30 according to the National Treasury statement of actual revenues and net exchequer.

Total revenue, both tax and non-tax, closed the period at Sh2.358 leaving a difference of Sh585 billion on the revised estimate of Sh2.943.