• The use of enforcement occasioned the genesis of the ‘adversary’ between the taxpayer and the taxman.
• The perceived adversary between these two parties has had a negative impact on compliance in many tax jurisdictions across the world.
Kenya is one of the countries that exercise a self-assessment tax regime.
This refers to a regime where the taxman puts trust on a taxpayer and allows them the leeway to declare their income for tax purposes. Its converse is a situation where the taxman conducts assessments on every taxpayer to determine how much each is supposed to pay. Without any doubt, the latter regime, whose twin sister is enforcement, is tedious and more expensive than the former.
Speaking of enforcement, it is one of the oldest and most popular tax administration tools. According to scholars, use of enforcement occasioned the genesis of the ‘adversary’ between the taxpayer and the taxman.
The perceived adversary between these two parties has had a negative impact on compliance in many tax jurisdictions across the world. It is on this account that many tax administrations have gradually been shedding off the enforcement skin and embracing self assessment tax regime based on trust.
The Kenya Revenue Authority has aptly demonstrated that the self-assessment regime is the way to go. KRA has even embedded this assertion on its mission statement where it aims to build taxpayers’ trust through facilitation. As a result. there is an apparent sharp contrast between the KRA we had decades ago and the current taxman.
With this type of trust, it is paramount for taxpayers to take advantage of the self-assessment tax regime to make true declarations of their income in a given period. This way, tax compliance will be cheaper for both the taxpayer and the taxman. It is not right to wait until the day the taxman will catch up with a taxpayer.