The Star interviewed several taxpayers who have received text messages from the taxman demanding them to submit documents to support stamp duty paid on assets they bought in the past five years.
The duty is levied on legal instruments such as cheques, receipts, military commissions, marriage licenses, land transactions and shares.
"Dear Esteemed Taxpayer, records held in our office indicate that you purchased the property and paid a stamp duty. An analysis of the returns filed on iTax shows that you filed returns for the years 2019 to 2022. In this regard, we wish to verify your source of funds for the said transaction,'' a message from KRA reads.
The revenue agency now wants affected individuals to provide several documents to support the verification process.
It wants copies of sales agreements, financial statements for the period when the property was acquired and bank statements for the affected year.
"You are required to provide the above documents within a week from the date of the notice, failure to which, necessary corrective measures shall be taken including issuing of additional assessments where applicable without further reference to you."
The notices have elicited public uproar, with those who spoke to the Star wondering why the revenue agency has embarked on a fishing expedition to claim taxes.
"I legally bought a piece of land in Bungoma during Covid-19 after selling two cows. I've been paying the balance in phases. Which documents should I now take to KRA?’’ George, a fruit vendor in Westlands said.
He wonders whether this is a move by the government to take over his acre piece of land, the biggest asset he owns.
Jane, a sales representative with a local media house has received several demands from the revenue authority.
"I visited KRA with the necessary documents to clear my name. They enquired where I sourced revenue to purchase my two-acre piece of land in Kajiado. I was cleared after scrutiny,'' she said.
Yet, Moses, a bookshop owner in Westlands is not amused by the message texts from KRA.
"Sadly, KRA has resorted to such ways to meet its targets. Do they want us to use mattress banks when buying assets? These knee-jack measures will chase away investors,'' he said.
Although we are yet to receive an official statement from KRA before going to press, an officer at the state agency confirmed that indeed there is an ongoing verification process.
A KRA official handling such cases said that the agency is conducting a verification exercise targeting excise stamps from 2019.
"We are just reconciling figures. If we find that the value of the property bought is way higher compared to the tax returns filed, the owner must explain,'' the official who is not the KRA spokesperson said in a telephone interview."
He added that they are targeting stamp duties on properties bought between 2019 to date.
These are some of the latest methods KRA is employing in a bid to hit its target for the year, with the latest reports indicating that it is likely to miss by close to Sh300 billion.
The revenue agency had hit the 55 per cent target for the financial year by March, with the report by the Parliamentary Budget Office (PBO) warning that it might miss the Sh2.49 trillion target by close to Sh330 billion.
This is despite the government upgrading tax policies in the Finance Act 2023, which saw a double increase in Value Added Tax for fuel to 16 per cent.
The Pay-As-You-Earn taxes for those earning above Sh500, 000 were also raised to 32.5 per cent while those earning above Sh800, 000 are remitting 35 per cent to the government.
It is also receiving a 1.5 percent housing levy per employee, matched by the employer.
The agency has also increased its human resource capacity to support swift follow-ups and collection processes.
In August 2023, the tax authority made the strategic decision to enlist military-trained officers to assist in identifying and addressing tax-related issues.
The 1,400 officers completed a two-month training programme at the Recruits Training College in Eldoret, officially qualifying them as revenue service assistants.
