The Kenya Revenue Authority is planning on integrating tax systems with telecommunication companies to enhance revenue collection.Details of the plan to expand the tax base to the informal sector are outlined in the 2023 Draft Budget Policy Statement shared by Treasury. It is part of the measures to raise more revenue to meet the Sh4 trillion target by 2024.
“As part of the economic turnaround plan, the government will scale up revenue collection efforts by KRA to Sh3 trillion in the FY 2023/24 and Sh4 trillion over the medium term,” the draft budget reads.The integration of the tax system with telecommunication companies is seen as a move to tap additional revenue from the multi-billion industry.
Telcos in Kenya make billions by providing various services to customers such as voice calls, text messaging, internet access as well as mobile money services.
In October 2022, President William Ruto noted that There are only 7 million people with KRA PINs, while in the same economy, over 30 million Kenyans spend and transact billions.“The fact that this opportunity remains unclear to KRA demonstrates why radicle changes are necessary,” President Ruto said at the time.
One of the other revenue collection measures is the reduction of the VAT gap, which currently stands at 38.9 per cent.KRA plans to fully roll out the electronic Tax Invoice Management System (eTIMS) to reduce this gap to 19.8 per cent.
This system will help to automate the tax invoice process and improve compliance, ultimately increasing revenue collection.The tax man also aims to reduce the corporate income tax gap from 32.2 per cent to 30.0 per cent.
KRA also plans to implement rental income tax measures by mapping rental properties and using a mobile App to track and monitor rental payments.Additionally, the agency will roll out measures at the Customs and Border Control to enhance revenue per unit, leveraging technology and data analytics.
Finally, KRA will focus on upscaling its technical capacity by increasing staff training and technology investment.This will improve the efficiency and effectiveness of the tax collection process, and will ultimately increase revenue for the government.