Kenyans should prepare for tougher times ahead after the taxman proposed a raft of measures which, if implemented, could see taxes increase.
Appearing before the National Assembly Finance and Planning committee, Kenya Revenue Authority (KRA) Commissioner General John Njiraini tabled the proposals, which have been sent to Treasury for consideration.
Those targeted are digital money platforms, members of professional associations, gamblers and service oriented businesses that do not remit income tax.
Tax defaulters have not been spared with a radical proposal that could see them listed with the Credit Reference Bureau (CRB).
This means that such defaulters will not access credit facilities and other financial services until they meet their tax obligations.
“The issue of remitting taxes has become a challenge. We want KRA to be allowed to list non-taxpayers with CRB,” Njiraini said.
Digital platforms in KRA’s cross hairs include online businesses, which, unlike traditional enterprises, are not easily visible to the taxman.
“Most money transactions are done on digital platforms. There is need for more clarity in the law on how these transactions can be taxed,” KRA said in its proposals.
“This is to ensure that we fully capture the sector. We propose provisions to support taxation and collection of tax from economic activities carried over digital platforms.”
Betting companies, already up in arms over a high tax regime, will be slapped with a 10 per cent exercise duty should the proposals be accepted by Treasury.
Mr Njiraini told the committee that the taxes already levied on the companies are inadequate, and there is need for a tougher taxation regime.
“Betting and other related activities have negative effects. The taxes currently being levied are not adequate,” Njiraini told the House team chaired by Joseph Limo (Kipkelion East).
KRA also intends to levy income tax on service providers that are currently out of the tax bracket.
Njiraini explained that such services include businesses within the security sector that have escaped the attention of the taxman in the past.
“Under the VAT Act, all services are subjected to the tax regime. For income tax, we have confined ourselves to management and professional services leaving loopholes that allow other service providers to escape the tax net,” said KRA in its proposals.
Should Treasury agree with the proposals, they will be included in the Finance Bill, which specifies government measures to raise revenue.
Other key recommendations include compelling professional organisations to ensure their members have PIN numbers.
This means that it will be impossible to register or renew membership to a professional organisation without a PIN number.
Businesses such as mobile service providers will also be forced to ensure that vendors and agents have PIN numbers so that they are captured within the tax bracket.
“We propose to expand the list of transactions that require PIN to include registration and renewal of membership to professional organisations,” KRA stated in its proposals to Treasury.
KRA also wants Treasury to put in place measures that will allow third parties to share information with the tax agency for purposes of tax compliance.
Through the tax proposals, KRA is seeking to bridge revenue gaps that plague it every financial year.
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