SHIFT

Digital land records to widen Kenya's tax base- CS Karoney

Karoney spoke at the 6th African Tax Research Network Congress

In Summary
  • The CS also noted that the process will reduce the cost of tax compliance and allow for real time decision making.
  • The government has already designed and implemented the National Land Information Management System (NLIMS) , as part of the digitalization reforms
Lands CS Farida Karoney
Lands CS Farida Karoney
Image: HANDOUT

The digitalisation of the land and property market will expand Kenya's tax base and enhance revenue collection, CS Farida Karoney has said.

The Lands Cabinet Secretary further said the process will reduce the cost of tax compliance, allow for real time decision making and reduce incidents of tax errors.

The government has already designed and implemented the National Land Information Management System (NLIMS), also known as Ardhisasa, as part of the digitalisation reforms.

“Implementation of the National Land Information Management System is a bold step by the Government of Kenya to move away from manual paper-based systems," she said.

She said the former was susceptible to wear and tear of land records, time wastage, corruption, low productivity, poor integration with other public sector agencies and distortion of the land market operations.

With the integration of the digital records and the data relating to registration of persons and businesses, it becomes very easy to expand the tax base through the capture of more properties into the system,” said the CS.

Karoney spoke at the 6th African Tax Research Network Congress, whose theme is “Maximising the revenue potential of property taxes through digitalisation”.

According to the African Property Tax Initiative (2009), property tax in Africa is stands at 0.38 per cent of the GDP on average, compared to developed countries where the property tax is the basis of local funding contributing an average of 2.2 per cent of the GDP.

The contribution of property tax exceeds one per cent of GDP in very few countries such as South Africa, Mauritius, and Morocco.

Kenya Revenue Authority Commissioner General Githii Mburu said that the sector the property market is one of the fastest growing and robust sectors in most economies

“Despite this exponential growth, its contribution to the revenue coffers is still at the minimal, an indication that its full potential is yet to be tapped,” said Mburu

In Kenya, the key property taxes include Capital Gains Tax (CGT) and Rental Income Tax.

“Digitalisation of the two property taxes through our iTax platform has enabled KRA to enhance administration of the two taxes through improved service delivery and expansion of the tax base,” said Mburu.

Under the platform, property owners investing in rental properties, are required to provide their Personal Identification Numbers (PINs) when registering for utility services such as water and electricity.

Through the existing information exchange programmes, KRA is now able to tell who owns what properties for tax purposes at the click of a button.

Logan Wort, Africa Tax Administration Forum (ATAF) Executive Secretary said property taxes are a low hanging fruit for many African jurisdictions, with the potential to significantly augment revenue inflows.

This he said can assist reduce the negative impact of the Covid-19 pandemic through domestic resource mobilisation.