Ruto's taxman faces full in-tray amid fresh bid to collect more

Humphrey Wattanga is congratulated by the  Chief Registrar of the Judiciary Ann Amadi after being sworn in as the new Kenya Revenue Authority Commissioner-General. [Collins Kweyu, Standard]

Harvard University-trained Kenya Revenue Authority Commissioner-General Humphrey Wattanga faces a huge task of overhauling the agency to achieve President William Ruto government’s ever-rising revenue targets.

Wattanga was sworn into office Thursday, setting up himself for the coveted but unenviable job of cleaning up and digitising the agency to enable it to mobilise more taxes for the government despite a slowing economy.

The America-trained scientist is expected to tap his rich career background in financial advisory having held stints in leading firms including Remington Group, Afcorp and Meghraj Capital.

KRA has perennially missed tax targets and Wattanga will be under pressure from the Kenya Kwanza administration to seal revenue leaks against the backdrop of higher collection targets and a slowing economy that has squeezed businesses and Kenyans hard.

President Ruto’s government has sought to broaden the tax base and raise revenue to enable him to deliver on his raft of pledges over the next four years.

Ruto wants KRA to increase tax revenues as a percentage of the gross domestic product (GDP) from 17.3 per cent over the current financial year to 17.8 per cent in the 2023/24 financial year.

KRA, under Wattanga’s three-year term, is therefore expected to tighten the noose on taxpayers after Ruto set a target to double collections by the end of his first term in 2027.

Ruto reckons KRA can adopt technology and digitise its tax-processing pipeline to boost collections.

“He (Wattanga) needs to push collections, widen the tax net, push the use of technology to track evaders, and make the TIMS/ETIMS system easy to use," said Nikhil Hira, tax expert and partner at Kody Africa.

Ruto reckons technology could play a critical role in growing tax revenues. KRA said last month it collected Sh2.166 trillion between July 2022 and June 30 this year.

“The imperative of embracing technological solutions to KRA’s strategic issues is clear,” said Ruto.

“There are only seven million people with KRA PIN numbers. At the same time, in the same economy, Safaricom’s M-Pesa has 30 million registered customers, transacting billions of shillings daily,” he added.

Wattanga is also expected to confront the ever-present graft monster at the agency. Ruto has often expressed his frustration with KRA’s failure to reach targets due to corruption and wants the taxman to beat that vice.

Echoing the serious challenge of alleged graft at the agency, the International Monetary Fund (IMF) recently singled out the prestigious large taxpayers' office as a place of interest for the reforms eyed by the Ruto government.

The IMF revealed that the Treasury believes accountability checks at the large taxpayers' office are key in ending alleged graft at the agency.

The office, based along Muthangari Drive in the upmarket Westlands commercial district in Nairobi, was formed in 1988 and serves firms with an annual turnover above Sh750 million.

The Treasury told the IMF that fast-tracking ongoing compliance checks and audits at the large taxpayers’ office was key for KRA to achieving its targets.

The Standard earlier learned that on the radar of investigative agencies seeking to crack the multi-billion shilling syndicate include senior managers at KRA domiciled in the large taxpayers' office, some board members and low-ranking staff.

Sources in the government said rogue businessmen have been colluding with KRA officers to manipulate and reduce tax liabilities.

The sophisticated cartels launch the schemes during tax audits and compliance checks for firms with pending bills.

They then lure KRA officers and offer them bribes in exchange for a reduction of tax payable.

A much-awaited purge to rid the taxman of rogue workers is yet to publicly kick-off, though, with anti-graft agencies remaining tight-lipped.

Ruto had in May made a stunning charge that rogue senior workers at Times Tower are colluding with tax evaders, which renewed calls for a clean-up of the tax agency.

He said there was an elaborate tax evasion syndicate involving rogue senior KRA staff, warning this could partly be the missing link in the taxman’s failure to achieve targets.

“Collusion, wanton bribe-taking and general corruption continue to pervade operations of KRA, facilitating tax evasion, massive leakages of potential revenue and inability to meet revenue targets,” said Ruto while filing his tax returns at KRA headquarters.

It will not be a walk in the park for Wattanga in case he takes on the corruption cartels as Ruto's warning on KRA's widespread graft was only the latest from successive heads of government.

In 2015, then President Uhuru Kenyatta ordered that all KRA staff undergo a compulsory lifestyle audit to account for their sources of wealth.

This followed financial scandals that had rocked KRA with revelations that millions of shillings were lost through corrupt deals.

No public information was provided on the audit findings.