The government is keen to sustain development through internally sourced revenue to reduce reliance on external borrowing while boosting the economy.
For Kenya to sustain its development agenda through internally sourced revenue, there needs to be closer collaboration between the tax authority and citizens.
The President has been vocal about payment of taxes and expects the Kenya Revenue Authority to collect all collectable taxes from all Kenyans, regardless of one’s position in society.
This has been mistaken by some individuals who are of the view that the government is using payment of taxes as a tool to harass influential politicians.
Whether true or not, Kenya needs to expand its revenue streams in order to fund its own development agenda.
This calls for concerted efforts from all sector and industry players for Kenya to be on the path to economic independence by 2030.
The adoption of technology by some jurisdictions has yielded positive returns for revenue collection.
Rwanda’s tax to GDP ratio stands at 16.9 per cent, with VAT accounting for seven per cent. This has been attributed to implementation of an e-invoicing solution that saw a 45 per cent leap in VAT collection.
Kenya is implementing various digital solutions for efficient services. Integration of these systems with the tax authority will allow a seamless exchange of information for a 360 degree view of the taxpayers’ economic transactions.
For KRA, it may require enhancement of capacity on big data analytics to drive compliance interventions that support the mobilisation of tax revenues.
For the private sector, KRA is on track with the recent integration of iTax with the betting industry. Data from the National Treasury shows that withholding tax on winnings from betting jumped by 116.9 per cent to Sh1.008 billion last December from Sh465 million in the same month in 2021.
It is expected that by end of March 2023, all betting and online gaming operators will be transmitting both daily payments and transaction data in real-time to KRA.
Similar integration with Telcos and digital platforms will enable KRA to receive real-time transaction notifications for analysis, revenue projections and compliance enhancement.
In addition, adoption of software-based technologies for e-invoicing is expected to boost accuracy in tax invoice declarations and reconciliation between filed returns and payments. In the long term, this will have a positive impact on Kenya’s Tax to GDP ratio, which is currently at 15.3 per cent, with VAT accounting for four per cent.
Generally, the adoption of data and intelligence-driven field operations by key players in the government will yield successful outcomes for Kenya’s revenue collection.
Other interventions may include a legislative framework to allow the National Treasury to withhold PAYE at source during disbursement, policy reviews on undertakings as well as zero-rated items.
