Taxman eyes Sh6b from super-rich Kenyans in 3 years
By Dominic Omondi | July 14th 2021
The Kenya Revenue Authority wants to collect about Sh5.9 billion from wealthy Kenyans in the next three financial years in what is aimed at promoting equity.
This is part of the taxman’s three-year corporate plan in which it intends to collect Sh6.8 trillion from Kenyans.
Tax collection from the super-rich Kenyans is expected to increase over the three years from Sh1.4 billion in the current financial year (FY) ending June 30 to Sh1.5 billion in FY 2022/23 and to Sh1.7 billion in the financial year ending June 2024.
KRA says in its eight corporate plan that increased compliance by the high-net-worth individual (HNWIs) is aimed at promoting equity with the rich paying their fair share of taxes.
In a letter of intent to International Monetary Fund (IMF) Managing Director Kristalina Georgieva, the National Treasury Cabinet Secretary Ukur Yatani and the Central Bank Governor Patrick Njoroge said the government will develop and implement risk-based compliance strategies for two to three non-compliant sectors by June 2021.
These sectors include professionals, high-net-worth individuals, the real estate sector and the extractive sector, including ensuring the KRA’s participation in cost audits in the upstream petroleum sector.
It is not clear how many super-rich individuals Kenya has with estimates from various reports differing. A report by the Swiss-based financial conglomerate Credit Suisse showed that the number of super-rich Kenyans shot up to 27,473 last year.
The report showed that the percentage of adult Kenyans with over $1 million (Sh108 million) increased to 0.1 per cent as some individuals defied the Covid-19 odds to multiply their wealth amidst an economic downturn. The number of HNWIs in this report, however, contrasts sharply with that which was done jointly by Knight Frank and Stanbic Bank which estimated that there were only 3,323 Kenyans worth $1 million and above, a drop of 21.5 per cent compared to 4,235 in 2019.
The report shows that most of the country’s super-rich have put their wealth in real estate, with a few being stashed in government securities. The government will also be going after the non-compliant registered businesses, professionals and the digital economy in its latest drive to expand the tax base.
Also as part of the plan, KRA has come up with a department to monitor the activities of taxpayers online in what is aimed at profiling Kenyans to net tax cheats.
KRA Commissioner General Githii Mburu said during the unveiling of the plan last month that they intend to achieve the three-year goal through tax simplification and deployment of technology, including machine learning, artificial intelligence and blockchain.
“We shall seal revenue leakages through a multi-faceted programme that will entail curbing corruption among our staff and tax evasion,” said Githii.
KRA said it intends to increase the number of taxpayers from the current 6.1 million to 8.1 million by June 2024, with the informal sector at the heart of its strategy to expand the tax base. The taxman needs Sh117.6 billion to implement the three-year strategy.
Yatani acknowledged the potential of the informal sector, which employs over 80 per cent of Kenya’s workers.
He said although the sector should pay its share of taxes, it also needs facilitation. “To expand the tax base, KRA is expected to do an in-depth analysis on the informal sector to gain a deeper understanding and its revenue potential,” Yatani said.
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