The taxman has pledged to double down on tax compliance and net new taxes from small- and medium-sized businesses and the informal sector amid rising jitters from a section of traders.
The Kenya Revenue Authority (KRA) Commissioner General Humphrey Wattanga said Friday the sector has a huge untapped potential in boosting the country’s tax base.
Speaking during the 2023 Annual Tax Summit in Nairobi, Mr Wattanga said the sector - which is estimated to employ about 15 million people, accounting for 83 per cent of the country’s total labour force - has a great tax potential and should be facilitated to uphold compliance.
“One of the initiatives under KRA’s tax base expansion programme is netting the informal sector into the tax bracket, the majority of whom are the MSMEs (Micro, Small and Medium Enterprises). This, therefore, informs the need to design strategies and policy interventions to enable KRA to tap this sector into the tax bracket,” he said. The taxman added that KRA would work with the National Treasury to establish policies that would simplify, harmonise and reduce the multiplicity of taxes obligated to the informal sector. Mr Wattanga also said KRA “will educate traders to appreciate the need for paying taxes.”
The announcement comes as the recently deployed KRA new personnel steps up its field activities to enhance compliance.
KRA said the 1,406 personnel known as Revenue Service Assistants (RSAs) have been deployed across the country to boost tax compliance amid mounting concerns from a section of traders and businessmen.
The new unit got elite paramilitary training from the Kenya Defence Forces.
KRA is banking on the new unit to nab tax cheats and rogue traders who evade taxes.
The 1,406 Revenue Service Assistants underwent military-grade training at the elite KDF Recruits Training School in Eldoret From June 20 to August 25 this year.
The training, approved by the military, underscores the lengths the Kenya Kwanza government is going to equip KRA personnel to enforce tax compliance.
KRA has perennially missed tax targets and is under pressure to seal revenue leaks against the backdrop of higher collection targets set by the government. Paramilitary training may not include shooting with guns but incorporates military elements akin to a conventional army.
The recruits were subjected to rigorous non-combat paramilitary training for the two-month training programme.
A paramilitary is an organisation whose structure, tactics, training, and sub-culture are similar to those of a professional military but which is not part of a country’s official or legitimate armed forces. KRA reckons the new elite unit of “fit as a fiddle mostly young men and women” will help the tax man boost compliance levels, especially among informal traders where compliance has remained a major challenge over the years.
“The role of a Revenue Service Assistant is purely field enforcement and intelligence gathering and management to detect, deter and stem tax evasion,” Treasury Cabinet Secretary Njuguna Ndung’u told Parliament recently.
“Since it is a fieldwork role, it requires physical fitness and alertness for swift and tactical skills, hence the RSA programme had a dimension of paramilitary training for effective policing intervention against VAT and Excise tax leakages.” Some traders in Nairobi’s commercial hubs had in interviews with The Standard accused the newly deployed personnel of harassment. The Kenya Kwanza administration had earlier vowed that KRA would end its controversial aggressive pursuit of tax cheats marked by raids on premises by its officers and property auctions.