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The trouble with Kenya Revenue Authority’s e-filing plans

By Agnes Wambugu and Geoffrey Nyaga

The Kenya Revenue Authority (KRA) is in the process of moving its tax system from a physical filing platform onto an electronic platform. Under this new system, data will be populated onto Excel templates by taxpayers or their agents, and uploaded onto the KRA database.

While the benefits of adopting an e-filing system are obvious, there are certain challenges that will arise.

The major concern is privacy. Who will be able to access the system? How can one ascertain that no other party has access to the files? Are taxpayers’ records safe?

And then there is the technical issue. The level of detail contained on the electronic returns is unnecessary and superfluous, and the shift assumes that taxpayers are technically equipped to navigate through the returns.

Excessive information

But the most challenging bit is the amount of time firms will take to complete these returns due to the excessive information that the KRA is asking for.

Notwithstanding the system’s imperfections, we should not throw the baby out with the bath water. A move to iTax is certainly a step in the right direction.

That said, the change will not only be in the returns, but also in the mode of making tax payments.

KRA is currently widening its reach by increasing the number of banks through which taxpayers can make payments.  Currently, taxpayers have to wait for payment receipts for almost a month to ascertain that their payment was received by the KRA.

Under the proposed system, once a taxpayer makes a payment to the taxman, it will be simultaneously reflected in the KRA system. The taxpayer will then be provided with a slip by the bank cashier showing that the  money has been remitted.

The iTax  system is also expected to help improve  KRA’s record-keeping system with regards to filing and payments. It will make it easier to  retrieve evidence of document submission or payment remittance.

It is, therefore, foreseeable that iTax will bring with it some merits.

It is also commendable that the KRA is engaging tax practitioners and other stakeholders to get their comments on the system before rolling it out. This will help the institution address problem areas before the public begins to use the system. 

KRA will need to consider conducting a sensitisation workshop for taxpayers to help them understand the proposed new system, its relevance and how it works.

Wambugu and Nyaga work for Deloitte East Africa. The views expressed are the authors’ and not necessarily those of the firm.


 

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