Economy
KRA awarded Sh1.2 billion to hire spies to look for tax fraud
Thursday 08 June 2023
Budget and Appropriations Committee Chair Ndindi Nyoro (left), National Treasury and Economic Planning CS Njuguna Ndung’u (center) and Treasury PS Chris Kiptoo at the Hilton Garden Inn on February 13, 2023, during the Budget and Appropriations Committee meeting to discuss supplementary budget estimates for fiscal year 2022/ 23. photo | Lucy Wanjiru | NMG
The Kenya Revenue Authority (KRA) has allocated an additional Sh1.2 billion to hire more intelligence and enforcement staff who will identify and stop tax fraud in new efforts to raise revenue and reduce reliance on borrowing.
Parliament’s budget and appropriations committee in a review of the budget for the year starting in July asked the Treasury to provide billions more tax levy to hire more staff.
The workforce will boost revenue collection from the planned new charges and pursue tax fraud as the Treasury seeks to collect at least Sh400 billion in additional taxes for the fiscal year starting next month.
The committee inflated the budget by NIS 81 billion over the spending plan submitted by the Treasury to Parliament to Sh3.67 trillion, adding to the pressure on the DPRK.
To shore up the revenue, President William Ruto’s administration has proposed a raft of tax hikes on items such as fuel, housing, mobile money transfers and digital content, angering citizens and the opposition who say the cost of living is already too high.
“Increased Sh1.2 billion (recurring) for the KRA to hire tax assistants,” says the Budget and Appropriations Committee on proposals awaiting approval by MPs.
is reading: Budget proposals that will affect you if they are implemented as formulated
The KRA, in early May, advertised Revenue Service Assistant positions, with the role listed as overseeing the issuance of E-TIMS receipts by traders, ensuring registered traders comply with VAT and monitoring compliance with tax regulations.
Other fees compile weekly and monthly reports on suspected cases of tax evasion, send notices of seizure of products held for excise, and intercept and verify tax receipts issued by businesses and taxpayers.
Dr. Ruto, who was elected last August on a platform to help the poor, struggled in the first months of his term due to mounting government debt payments, lack of revenue collection, and ever-rising commodity prices.
It is under pressure to increase revenues in the face of rising debt payments amid pressure to ensure financial stability and create job opportunities for young people.
KRA collections, which make up the bulk of the government’s cash flow, are expected to grow to Sh2.43 trillion from the current target of Sh2.04 trillion for the year ending in June.
Treasury will leverage increased data usage and links between the KRA systems with third parties such as banks and mobile money transfer platforms such as M-Pesa to spy on taxpayer activities, use Internet-enabled cameras at transportable goods processing plants and fully implement tax records Electronic digitals (ETRs) to increase revenue.
In terms of taxes collected as a percentage of annual economic output, Kenya has underperformed other countries such as South Africa, the State House said.
Dr. Ruto believes that the government’s efforts to increase tax collection have been hampered by unscrupulous KRA employees, who he says have spent their time helping corrupt taxpayers evade payments.
The government plans to reduce the budget deficit to 4.3 percent of GDP in the 2023/24 fiscal year, from an estimated 5.8 percent in the current period, before reducing it to 3.6 percent in the 2026/207 period through reduced borrowing.
The KRA Law Enforcement Unit uses various databases to pursue suspected tax frauds, including bank statements, import records, vehicle registration details, Kenyan energy records, water bills, and data from the Kenya Civil Aviation Authority (KCCA), which detects individuals who They own assets like planes.
Vehicle registration details are also used to smoke individuals who drive quality cars but don’t have much to show in terms of remitted taxes.
is reading: KRA to track mobile financial transactions in clearing tax fraud
Electricity meter records in Kenya help the tax man to locate the owners, some of whom have been subjected to huge tax demands.
The tax man seeks details of the suppliers and contractors hired by the provincial governments.
She says a sharp increase in imports of luxury goods and investments worth millions of shillings in property has opened her eyes to a potential huge tax leak, which if exploited could generate billions of shillings in additional revenue for the Exchequer.
This argument is supported by the fact that only a few Kenyans are officially registered as belonging to the high-income bracket despite the huge growth in consumption evident, especially in Nairobi.
The proposals in the 2023 Finance Bill, some of which were rejected by previous parliaments, paint a picture of a government eager to give the KRA teeth to bite while making it costly to challenge tax demands in the event of a dispute.
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