More pain for hustlers as KRA implements new tax
Short reprieveEven with the lack of guidelines from KRA, the reprieve for the traders is very short given that the projected revenues to be collected have been budgeted for. The President’s resolve is the latest attempt to broaden the tax bracket, a year after the State failed implement a similar levy known as a turnover tax. KRA told The Standard that all eligible taxpayers have a responsibility to ensure any levies due are paid, an indication that it would follow up to ensure compliance.
SEE ALSO :KRA intercepts two stolen luxury cars“All eligible taxpayers are advised to pay the presumptive tax at the time of paying the business permit fee,” said the authority through its external communications agent. KRA added that the presumptive tax was intended to bring on board taxpayers who are outside the tax net by making them pay a modest amount, effectively easing the burden on formal sector workers. County officials said the taxman had not indicated how the tax would be charged alongside business licences.
County defiance“That tax is for KRA. We are collecting what is only owned to the county. As long as they have not told us anything about it, we will just collect ours. You should take advantage and pay now,” a county official at the Nairobi licensing office said. Officials from the Council of Governors (CoG) accused KRA of taking too many liberties by assuming that counties would collect the taxes without being formally approached. The Standard, stating that businesses would have to calculate the tax and pay at a later date through banks affiliated with the taxman. It said that traders should upon paying for their permits, compute 15 per cent of the fee, obtain a receipt from their iTax portal, and then deposit the amount with KRA’s appointed bank. “The taxpayers will be required to generate a payment registration number on iTax under presumptive tax payment, after which they can pay through M-Pesa or any other partner bank,” KRA said in a notice. Trying to net the informal traders is among the painful measures that the Government is taking to grow its revenue base. Informal traders are the bulwark of the economy.
Revenue streamsA recent report detailing the counties’ revenue streams puts business permits at the top, with a present annual target of Sh55 billion for 2018. It is, however, possible for the achievement rate to be just about 60 per cent, translating to Sh33 billion in actual receipts. At present, taxation on salaries, also known as Pay As You Earn (PAYE), levied on a cascaded scale, is the most important source of revenues for the State. It was expected that informal traders, including those operating estate kiosks and barber shops, would help bear the burden of running the Government’s operations.