KRA targets VAT as top revenue source through digital overhaul

KRA rolls out eTIMS to boost VAT compliance and block fraud. [File, Standard]

The Kenya Revenue Authority on Wednesday said it aims to make Value Added Tax (VAT) the country’s leading tax head through new digital systems that have already driven up revenue by 28 per cent.

Speaking during the African Development Bank’s VAT Digitisation Seminar in Nairobi, Commissioner for Medium and Small Taxpayers George Obell said the shift to the electronic Tax Invoice Management System, known as eTIMS, has blocked fraudulent claims, simplified returns and improved taxpayer monitoring.

“The VAT system in Kenya is undergoing a revolution.Our goal is for VAT to become the most reliable and highest-yielding tax head. VAT is paid by consumers; businesses are simply agents. When the system is misused, the public and the government both lose,” said Obell.

Obell noted the new system rejects deductions that are not backed by declared transactions, which has helped seal common loopholes used to file false claims.

He added that the ongoing upgrade will make the system easier to use.

“The merchants won’t have to go through hoops anymore, they just click and file,” he added.

Obell noted the reforms are inclusive and tailored to the needs of various taxpayers. Large firms can link directly to the tax authority’s system, while small and informal traders can use simple tools like USSD codes on basic phones.

“You can’t have a one-size-fits-all system,” said Obell, adding, “We are building flexible solutions that are fit for purpose and aligned to business realities across the spectrum.”

According to Obell, the new system has exposed long-standing weaknesses in VAT enforcement and guided ongoing policy changes on registration thresholds and tax fairness.

He urged other African governments to back similar changes.

“Digital tax administration is not just about adopting technology, it is a structural reform,” said Obell.

“It’s about building a fairer, more transparent and efficient tax system for all.”

Tax officials from several East African countries attended the seminar and shared their experiences with digital reforms in tax collection.