More than 17,000 individuals and companies, nervy about heightened surveillance, surrendered Sh8.5billion to the Kenya Revenue Authority (KRA) through a tax amnesty scheme, helping the agency to net a total record collection of Sh2 trillion in its ended financial year.
The Voluntary Tax Disclosure Programme (VTDP), which commenced in January last year, gives tax evaders immunity from prosecution, penalty charges, and interest if they voluntarily declare their previously undisclosed assets and income.
“The extensive use of data and intelligence to unearth unpaid taxes have led to improved voluntary compliance and tax base expansion which is aimed at onboarding taxpayers previously not paying their fair share of taxes” KRA Commissioner-General Githii Mburu said.
The sizeable collections through the amnesty scheme came in the wake of heightened whistleblower activity in which some 850 graft reports, with a total tax estimate of Sh6.26billion, were handed to the KRA by spies in the ended financial year, an increase compared to the previous year when informers turned in evasion claims worth Sh2.9 billion.
One of the strategies KRA has employed is the web-based system iWhistle, through which the public can unanimously report corruption to KRA in return for a reward, which includes five per cent of the taxes or duties recovered or Sh2 million per case, whichever is less.
KRA enforcement unit has been using various databases, among them bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority, which reveal individuals who own assets such as helicopters to pursue suspected tax cheats.
KRA Thursday announced a record Sh2.031 trillion revenues for the financial year 2021/22 up from Sh1.669 trillion it collected in the previous year due to improved tax collection in key tax heads.
The entity collected Sh242 billion in corporation tax driven by growth in the finance and insurance, manufacturing, wholesale and retail, and transport and storage sectors, marking a 32.7 per cent growth from the revenue collected in the previous year.
The steady recovery of the key sectors of the economy following the easing of Covid-19 restrictions drove job creation, which boosted the collection of Pay As You Earn tax, which grew to Sh461.8 billion.
KRA also recorded a 24 per cent value-added tax (VAT) revenue growth to Sh244.6 billion, driven by new tax measures passed through the Finance Act, 2020, including the reinstatement of the 16 per cent VAT on cooking gas and increased consumption owing to economic recovery.
Meanwhile, excise duty collection grew 6.2 per cent to Sh66.5 billion which the agency attributed to increased enforcement against tax evasion, especially in the alcoholic and cigarette sectors.
The tax agency reaped big from the numerous taxes and levies charged on fuel, raising its collection from petroleum products by 9.4 per cent to Sh247.9 billion—marking a performance rate of 96.8per cent. The higher fuel revenue was driven by increased prices of fuel coupled with higher consumption of fuel products.
Tax collection to improve
Mr Mburu said tax collection is expected to improve further as KRA rolls out its Tax Invoice Management System (TIMS), which aims at plugging loopholes resulting from weaknesses in the electronic tax register system.
“The system will help in standardisation and authentication of tax invoices at the time of generation by the trader and transmission to KRA on a real-time or near real-time basis. It will also enable officers, traders, and the public to verify the validity of a tax invoice through the invoice QR code or tax invoice checker on the iTax portal” he said.
The authority says it has enhanced active surveillance and enforcement operations, reinforced by collaboration with the multi-agency team in fighting economic crimes.
“KRA has also partnered with other jurisdictions globally to exchange tax information. Kenya’s Exchange of Information (EOI) steadily increased from 73 in 2020 to 173 in 2021. Kenya also recovered Sh10.5 million in 2020 and Sh985.2 million in 2021,” the authority stated.
[email protected]. Additional reporting by Peter Mburu