The Kenya Revenue Authority (KRA) has failed to collect more than Sh150 billion in taxes, as 3,674 taxpayers, most of them major companies, failed to report business transactions worth nearly half a trillion shillings, exposing the scams used by the companies. To evade taxes.
The Auditor-General revealed that in the year ending June 2023, about 1,486 companies classified as large and medium taxpayers evaded taxes worth Sh147 billion after failing to report revenue worth Sh490 billion to the KRA.
In a report on KRA’s revenue and accountability data for the year ending June 2023, Auditor-General Nancy Gatongo noted that companies reported revenues of Sh2.5 trillion under value added tax (VAT) liabilities but when reporting income tax liabilities reduced revenues to Sh2.5 trillion. shilling. .05 trillion, to pay lower corporate taxes.
“A review of i-Tax taxpayer returns from offices of large and medium taxpayers for the financial year 2022/2023 revealed that 1,486 taxpayers declared total sales of Sh2,539,360,229,377 under the VAT liability while the same taxpayers declared total sales of Sh2,539,360,229,377 049,318,070,324 under income tax liability resulting in less than Shs 490,041,822,592 turnover under income tax liability.
“The undisclosed turnover of Sh490,041,822,592 under the income tax liability would have attracted corporate tax of Sh147,012,647,716 which was not collected by the authority,” Ms Gatongo points out.
The statement revealed how companies have avoided paying billions of shillings in taxes by lying about their revenues, even as the tax collector struggles to collect enough.
During the year, KRA collected taxes worth Sh944.4 billion from income and capital gains and exceeded the overall target by Sh107 billion.
The review also notes that the deficient declaration exposes significant loopholes within the KRA and calls for action on its officials responsible for dealing with companies.
“Although management indicated that action had been taken by issuing additional assessments, adjusting returns, and reviewing customer compliance, no explanation was provided as to why action was not taken as required in Sections 6.02(ii) and 6.03(v). ) and (6) a local tax administration compliance management manual which requires the department to identify discrepancies and the underlying reasons and prepare a report recommending action by each taxpayer account manager.
Ms Gathungu also stated that KRA failed to collect Sh5.1 billion under capital gains taxes from the sale of 2,188 properties worth Sh34.3 billion.
During the year, out of Sh944.4 billion taxes on income, profits and capital gains, Sh5,606,957,074 was collected in respect of capital gains tax.
However, the analysis of the collection of stamp fees revealed that a total of 10,528 properties were transferred at a value , 520,865 shills .
Combined with undeclared taxes of Sh147 billion by large and medium enterprises, this means that KRA failed to collect taxes worth Sh152 billion during the year to June 2023.
During the year, the authority collected Sh272 billion in local value-added tax, Sh263.8 billion in corporate taxes, Sh494.9 billion in pay-as-you-earn (Paye) taxes, Sh68 billion in local excise duty, and Sh129.9 billion. On imports. duty.