Kenya: Now taxman adopts diplomacy to grow revenue

It will now be possible for any individual or business having a tax dispute with Kenya Revenue Authority (KRA) to demand to know why the authority is planning to visit them, what it is seeking to find out, what documents it is seeking and when the planned compliance, audit or investigations processes will be complete before agreeing to host the taxman.

This follows the launch of new rules and regulations that will govern how KRA notifies and carries out a tax audit on any tax payer, conducts searches and investigations and makes conclusions before any dispute ends up at the soon to be established tax tribunal or before a court of law.

“These new provisions do not, however, provide comfort to those engaged in tax evasion or when one is engaged in willful misconduct,” explained John Njiraini, KRA Commissioner General.

He made these remarks yesterday during the launch of two documents - Alternative Dispute Resolution and Audit Governance Frameworks, at the Kenyatta International Convention Centre (KICC).

“In the past, there have been complaints that tax audits are merely a fishing expedition, crafted to fix particular tax payers. What we want is for an individual to be comfortable when KRA pays them a visit. Our audits will now be specific and offering those with disputes an opportunity to react before we visit them. We are also reforming the audit process by establishing audit centres in Nairobi, Mombasa, Kisumu, Eldoret and Nakuru,” said Njiraini.

These audit centres will transform and focus in providing taxpayer support activities, including education, outreach and recruitment. The new audit and tax dispute resolution rules have been subjected to roundtable discussions between KRA and Institute of Certified Public Accountants of Kenya (ICPAK), Kenya Private Sector Alliance (KEPSA) and Kenya Association of Manufacturers (KAM) among other stakeholders.

“By launching these two policy documents, what we are doing is trying to address concerns and painful areas that tax payers go, including cases where audit, investigators and enforcement officers from the authority collide during a raid at the premises of an individual or business. What this means is that officers at KRA are not aware of the other’s activities,” said Pancrasius N Nyaga, Deputy Commissioner Large Taxpayers Office (LTO) at KRA.

KRA also announced that beginning July 1,  a tax tribunal shall be made operational to ensure that those with tax disputes are given an independent hearing and a second chance before the matter proceeds to court,” said George Obel-Acting Chief Manager-Audit programme- KRA.