Kenya Revenue Authority gets Sh10bn more to nail tax cheats

The Kenya Revenue Authority (KRA) is to be allocated an extra Sh10 billion to boost identification and capture of wealthy tax cheats in what promises to be the biggest crackdown yet on high-net-worth individuals and firms.

 The budgetary allocation follows National Assembly Finance Committee proposals to review the law and give the authority at least two per cent of the taxes it nets to intensify revenue collection.

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This will raise the taxman’s budget to Sh32 billion given that it is expected to collect Sh1.6 trillion this year.

The Treasury had budgeted Sh21.3 billion for KRA in the year starting July, up from Sh20.8 billion, it got in fiscal 2019/20.

The additional funds will give KRA more muscle in its war on tax cheats, allowing it to acquire equipment and hire more staff, especially enforcement and compliance workers.

KRA seeks to hire 1,000 workers who will be investigating rich people’s sources of income and spending against their tax remittances.

Some will work on intelligence reports to seek recovery of unpaid taxes with the additional staff being given a target of raising billions in the new financial year.

Changes to the Finance Bill by Parliament’s finance team have recommended changes to the KRA Act to state that the allocation should be “at least two percent of the revenue actually collected by the authority in the previous financial year”, but also that it should not exceed this percentage.

The law states that the allocation should not exceed two per cent, without assigning a floor, leading to the taxman getting about 1.5 per cent of the revenue collected the previous year.

 The same parameters will apply when KRA collects revenue on behalf of county governments — opening another cash stream for it.

“The amendment is to ensure that the KRA is allocated a minimum of two percent of the revenue collected in the previous financial year,” said the committee in the report tabled on Thursday.

“The amendment also provides that the KRA may receive a commission of not more than two percent of the revenue collected on behalf of a county government and that this should form part of the funds of the authority.”

This week, MPs will vote on the recommendations of the House committee before the President signs the new Finance Bill into law ahead of July 1 when it comes into effect.

KRA has been seeking additional funds over the years to enhance its capacity to collect revenue amid ever-rising targets that haven’t been met for some time.

The agency has been intensifying its crackdown on tax cheats using various databases, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority, which reveals individuals who own assets such as aircraft.