KRA puts firms with tax arrears on notice

By John Njiraini

Kenya Revenue Authority (KRA) has put companies with tax arrears on notice.

The taxman says it will be going after these firms as it seeks to meet tax collection targets for the 2011/2012 financial year.

Outgoing KRA Commissioner General Michael Waweru yon Tuesday said companies, including State parastatals, owe the taxman Sh80 billion.

He said the authority would be seeking to chase a substantial amount of the money as it targets to collect Sh733.4 billion this financial year.

The target will be 15.5 per cent growth over the Sh634.9 billion collected in 2010/2011 financial year.

"We are looking at areas like debt to improve tax collection because we want to make sure we meet full year targets," he said.

Waweru, who was speaking after launching the tax collection figures for the second quarter of 2011/2012 financial year running from October through December, said that although the first half of the 2011/2012 financial was tough due to numerous economic shocks, KRA expected better performance in the second half.

During the period under review, the taxman collected Sh177.2 billion compared to Sh162.7 billion collected over the same period of 2010/2011 financial year.

Revenue growth

During the quarter, the domestic tax and custom services departments recorded revenue growth rates of 12.3 per cent and 3.1 per cent, while the road transport department recorded a decline of 1.3 per cent.

Sh115 billion was collected from domestic tax, Sh61.3 billion from customs, and Sh702 million from road transport.

"The operating environment leading into and during the second quarter 2011/2012 was not promising as it was characterised by unfavourable macro-economic environment with high inflation, rising interest rates, fluctuation of the exchange rate, and high oil prices," said Waweru. Incoming Commissioner General John Njiraini and other commissioners was also present.

During the period, inflation hovered at an average of 19.19 per cent, interest rate at 17.10 per cent, the shilling exchange rate averaged Sh93.87 against the dollar, while world oil prices averaged $110.9 per barrel. According to Waweru, KRA is pushing ahead with reforms aimed at enhancing tax collection including the launch of a Rapid Result Initiative today to decongest the Mombasa Port.

"KRA will play its part in decongesting the port, but Kenyans should stop using the port as a storage place," he said.

Speaking at the same venue, incoming commissioner general who is set to take over on March 3 said his tenure at the authority would be guided by a three-year corporate plan that is currently in preparation.

"I will be working according to the priorities we set in the corporate plan that should be ready by July," said Njiraini.