The National Treasury has revealed plans are afoot to station Kenya Revenue Authority (KRA) staff inside major factories across the country to enhance monitoring and tighten the noose on tax cheats.
This is despite planned heavy investments in technology indicating KRA - which is under pressure by the Ruto government to collect more taxes - is expected to pull all stops to nab tax cheats and boost collections.
Treasury has backed the move to embed KRA staff in all factories, saying this gives the taxman "eyes everywhere and anywhere" in manufacturing hubs, as the resident spies will be able to provide it with real-time surveillance.
Under the deal, factories will be required to give unfettered access to KRA staff who will report to work daily, just like the production staff in a factory.
KRA reckons such resident staff will be able to unearth any irregularities and discrepancies in the filing of taxes by rogue manufacturers.
The staff will complement other monitoring measures such as CCTV cameras inside factories wired to KRA systems.
"Going forward, KRA will address some of the challenges hampering enhanced tax compliance as follows...monitoring of excisable goods factories to ensure proper monitoring of production; under-declaration of excisable goods to evade taxes through the placement of resident officers to monitor production," says the National Treasury in internal documents.
Other measures will include providing strict timelines for factories to meet requirements; establishing a production monitoring command centre to monitor production in real-time, and; enforcing all factories to meet all factory requirements by use of metering and monitoring tools.
KRA has been under pressure by the government to seal revenue leaks and boost State coffers to enable Treasury to wean itself off its reliance on public debt.
The taxman has gradually been rolling out new tools to enable it to collect transactional data from traders, individuals and companies in near real-time, tightening the noose on tax cheats.
Armed with the new electronic invoicing and reporting tools, KRA believes it will be able to collect information without waiting for taxpayers to file, even at the point of a commercial transaction to make its own assessment of the tax due.
This includes integration of KRA tax systems with critical government systems to allow a "seamless exchange of information for a 360-degree view of the taxpayers' economic transactions" and enhancement of KRA capacity on big data analytics to drive compliance.
KRA last, year rolled out new internet-enabled electronic tax registers (ETRs) for all businesses with an annual turnover of at least Sh5 million.
The ETRs are expected to relay real-time data on daily sales to the taxman. Under the new system, KRA will receive sales and invoice data from all registered firms and traders daily in a fresh push to boost revenue collection and curb tax evasion.
Traders will also be required to seek the taxman's permission to perform any other business the next day under the system, meaning incorrect or incomplete data logged the previous day could lock them out.
President Ruto has given KRA a target of Sh3 trillion by the end of the next financial year, and to double it by the end of his first term in 2027. He noted that tax collection is currently below par.