More pain for hustlers as KRA tightens noose on small businesses to boost revenue

The Kenya Revenue Authority (KRA) has now trained its guns to the informal sector of the economy in a bid to raise more taxes.

KRA is targeting business and individuals with a turn-over of Ksh.200 million and below in its efforts to widen the tax net.

According to the Acting Commissioner of the newly formed KRA Department of Micro & Small Taxpayers, George Obell, despite the high numbers that comprise the sector, its contribution in tax revenue has remained negligible.

Obell pointed out that the formation of the department was to solely address the unique needs of players in the category.

“What we miss on the large and medium side is the numbers are on this other side; for example, we have about 20 million PIN holders and most of them are the small and micro taxpayers, these are the ones we want to focus on. And if you look at the entire bucket of domestic taxes, medium, large and government agencies give us about 86 percent and all these other numbers give us only 14 percent, and you see the opportunity there to be able to grow the basket,” said Obell.

To ensure the efforts bear fruits, the taxman is set to deploy numerous strategies to monitor transactions of micro and small taxpayers and ensure there is no underdeclaration of revenue.

KRA notes that although some have registered for their Personal Identification Number (PIN), some have not been shouldering their burden by filing Nil returns.

This is a challenge that the taxman now hopes can be addressed through information sharing on assets such as land and motor vehicle which are already win government systems.

“That’s where we got a gap, and how to address this we are looking at the data that is available. You’ve got information when you're doing transactions at every level, that information or that transaction will be picked out; let me give you a simple example, if you offer services to an established business and it’s a service that attracts withholding tax,” Obell added.

“They are going to withhold and remit and they are going to ask you for your PIN and use information to remit that now that withholding tax is not a final tax, so we already are expecting you to know that at the end of a period you’ve got to file and declare the total income and we can work backwards.”

In the new revenue push, KRA will be keenly focusing on government suppliers, transport sector player as well as those in the ICT and agriculture sector, with the taxman set to incentivise the consumer to seek valid fiscalous invoices which will in turn bring more visibility in those sectors.

“We have got to reach them where they are and you’ve got to find ways and means to be able to have critical point that you can then be able to reach them because you firn them in several ecosystem,” Obell added.

In an effort to address the bottlenecks that small and medium enterprises have been facing in their compliance journey, KRA hopes that this new department will be able to address those challenges ensuring more participation from these sectors.