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KRA nets Sh26b from annual tax disputes

By Dominic Omondi | Aug 26th 2020 | 2 min read
By Dominic Omondi | August 26th 2020

The Kenya Revenue Authority (KRA) collected Sh25.8 billion in the last financial year from disputes it had with taxpayers in and out of court.

This was from 652 cases that were resolved during this period according to Paul Matuku, the KRA Commissioner for legal services and board coordination.

He said this yesterday during a press briefing on revenue performance for the financial year 2019-20.

Besides getting the money through the legal system, which starts from the tax appeals tribunal, KRA says it recovered Sh9.5 billion through the alternative dispute resolution (ADR) framework in the financial year under review.

“In 2018/2019, the revenue released was Sh8.1 billion. In comparison, there was an 18 per cent increase in the revenue yield,” Matuku said.

The ADR team, he added, closed 284 cases in the 2019/2020 financial year, compared to 237 cases in the previous financial year.

In August last year, KRA said it expected to charge 600 suspected tax cheats in 12 months as it moved to ensure tax compliance.

From the 600 cases, KRA had hoped to net Sh15 billion, mostly through plea bargaining, where suspects agree to pay the money in exchange for amnesty.

Last year saw KRA up its ante in the hunt for tax evaders, with billionaire businessman Humphrey Kariuki among those caught by KRA’s dragnet. He was charged in court.

Alcohol manufacturer Keroche Breweries also found itself on the wrong side of KRA, and has been slapped with a Sh9.1 billion tax bill after losing a five-year legal battle.

The decision could cripple the Naivasha-based brewer which was counting on the tribunal to spare it from the tax demand by KRA. With the private sector struggling in a tough operating environment, the taxman has found it even harder to meet its targets. KRA has, in turn, had to rely on tax compliance to up revenue collections.

Despite mobilising Sh1.6 trillion in revenue in the financial year that ended June, KRA’s performance was hugely hampered by the coronavirus situation.

Data from the National Treasury shows that the government lost close to Sh71.5 billion in taxes in the first five months since the start of Covid-19 in Kenya.

The pandemic has led to businesses shutting down and workers being laid off.

Latest data shows that between March and July, KRA collected Sh575.9 billion from taxpayers, an 11 per cent drop compared to Sh647.4 billion that the taxman netted in the same period last year. Alex Mwangi, the KRA deputy commissioner in charge of research and statistics, said the worst is over with the tax performance in August showing improvements.

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