Since time immemorial, taxation has been perceived as a hard nut to crack. In light of this, a top global agenda on tax administration has been to explore possible avenues that would lead to simplification of tax processes as much as possible.
Many scholarly findings unanimously posit that one of the most important outcomes of a simplified tax system is improved tax compliance.
In his article titled ‘Tax Simplification: Issues and Options’ published on Brookings in 2001, William Gale notes that successful simplification of the tax processes has numerous benefits. Fundamentally, Gale notes that simplification of tax processes means reduced cost of compliance in terms of time, money, and mental anguish.
The discussion on simplification of the tax processes is very live in the Kenyan tax jurisdiction. Kenya Revenue Authority (KRA) in conjunction with various economic and tax administration think tanks have been on the front-line cracking their brains on the best way to simplify tax administration in Kenya.
One of the platforms KRA uses to engage scholars and members of the public on tax matters is the annual tax summit.
The annual tax summit, now in its fifth year, has availed a perfect opportunity for fruitful engagements that inform important policy decisions on tax administration.
This year’s annual tax summit is anchored on the theme “Tax simplification and digitisation for economic transformation”.
The theme resonates well with the global agenda mentioned earlier on simplification of the tax administration process. The theme also aligns to the contemporary mass digitisation of processes.
However, there has been a two-sided coin of perception when it comes to automation of the tax processes. On the one hand, automation of tax processes is viewed as a crucial step towards conforming to the contemporary digital era. One of the merits of digitising the tax processes is enhancement of efficiency in tax administration.
Some years back when tax administration was largely manual, it would take inordinately long to have crucial services delivered. For instance, before implementation of iTax, taxpayers had to visit KRA offices in person to apply for tax compliance certificates, a process they can now initiate from the comfort of their houses or offices.
Prior to iTax, submission of tax returns, especially the annual income tax returns, was a nightmare, thanks to the long and meandering queues especially during the deadline. iTax, has now put that to an end.
The efficacy of iTax in doing away with long queues was more pronounced during this year’s filing season where only a handful taxpayers showed up on the last day.
However, although not totally against digitisation of tax administration, some see it differently.
They term digitisation of tax administration an obstacle to tax compliance, especially in countries with low uptake of information and communication technology.
This begs the question: Do we maintain the manual tax administration and lag behind in efficiency, or should we digitise the system for enhanced efficiency?
The annual Tax Summit has for the fifth year now provided the perfect ground for such conversations affecting tax administration in our country.
This year’s tax summit, just like previous ones, provides an opportunity for members of the public and scholars to air their views on various tax policies and reforms with a view to making them suitable for administration in our jurisdiction.
In other words, the two-day annual tax summit promotes the spirit of public participation on tax matters. The Tax Summit will be held at Kenyatta International Convention Centre (KICC) on October 16 and 17, 2019. Renowned local and international tax and economic affairs experts with a wealth of experience that suits the teething issues on tax administration will also be in attendance.
The resolutions reached during the annual summit play a key role in informing KRA’s next course of action in improvement of tax administration. During the 4th Annual Tax Summit last year, for instance, a key proposal was made that KRA should institutionalise engagements with the informal sector.
Though contributing significantly to the Gross Domestic Product of our country, it has been hard bringing the informal sector into the tax net. As a result, KRA has organised a series of tax seminars for the informal sector to better understand the sector.
From these engagements, KRA has learnt that majority of the sector players are willing to be tax compliant. All they require is facilitation and information on how to do so. One of KRA’s tax base expansion strategies is bringing the informal sector within the tax net.
KRA is on course implementing other resolutions arrived at during the previous tax summits for purposes of making tax administration more efficient and at the same time improving the tax payment experience.
The outcome of this year’s tax summit will be a landmark input in the transformation journey of tax administration in Kenya.
The writer is the head of Marketing and Communication Department at KRA
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