Give Kenyans reason for paying taxes with a smile

Businesswoman calculating tax at desk [Courtesy]

Kenya Revenue Authority (KRA) is over-working.

Fresh from warning Kenyans flaunting their wealth on social media that it would go after them, the taxman has announced a timeline on the roll out of a new electronic tax register (ETR).

In a notice on Tuesday, KRA gave suppliers of ETRs until January 15, 2022 to adopt the new machines that are configured for real-time transmission of data to the taxman’s register.

This will be achieved through the Tax Invoice Management System (TIMS). TIMS-compliant ETRs will capture and send all of a trader’s transactions, especially invoice, real-time, making it difficult for businesses to evade paying value-added tax (VAT).

This is not only good for the taxman, who will be able to get his dues, but also for the trader as it will eliminate the need for availing physical invoices in case of a dispute between KRA and taxpayers.

Since 2005, traders have been on non-TIMS compliant ETR, where an initial increase in the 16 per cent VAT collection was shortly eroded due to inherent technological shortfalls in the current ETR machines.

Some of the shortfalls were due to tampering with the gadgets and misdeclaration or under declaration of sales transactions, which could have cost the country a lot of revenue.

VAT is one the most critical tax heads that the government relies upon to fund its budget with the taxman given a target of Sh583.2 billion, nearly a third of the total ordinary revenue, by end of June next year.

But it is also time for the Government to support the businesses if it expects full compliance. Individuals and businesses pay taxes because they expect a service in return. They expect good roads, better equipped hospitals and schools and so on. No one would be happy to pay taxes if all they hear day in day out are stories of wastage and taxpayers’ money going down the corruption drain.

If the Government would want to see compliance, it needs to demonstrate that taxes are not a burden. If it can’t, the most logical thing to do is to cut the tax rates.