At Least 30 Per cent Of The Tax is not collected every year.



Kenya Revenue Authority (KRA) fails to collect at least 528 billion of tax due every year equivalent to 6.6 percent of the country’s GDP estimated at Sh8 trillion.

The tax agency wants the Government to guarantee it an allocation of at least Sh103.69 billion to enable the taxman to grow incomes by 12 per cent over the next three years.

 Last week, KRA said that were this to happen, it would be able to raise Sh58.8 billion, raking in Sh6.1 trillion by 2021.“The Government has got ambitious plans to invest in other areas so naturally we are competing for resources. We may not get to a level of where we want, but we have reached a level of understanding of how we should prioritize allocation to KRA and look for a way KRA funding can be ring-fenced because we are at the beginning of the process so if things do not work here they do not work for the country,” said Commissioner-General John Njiraini during the launch of KRA’s seventh Corporate Plan in Nairobi.

According to the taxman’s Seventh Corporate Plan for 2018-2021, at least 30 per cent of the taxes due in five main tax heads in Kenya is not collected every year.

The report showed KRA fails to collect at least 45 per cent of Value Added Tax and 17.6 per cent of Corporate Income tax. Estimated 34.3 per cent of personal income is not remitted, 35.6 per cent of Import Duty and 15.2 per cent of Excise Duty.

To reduce the tax gap and achieve revenue growth above the nominal GDP growth rate, KRA is planning to expand tax base that will see it raise the number of active taxpayers from 3.94 million to 7 million by 2021.

Early this month, the tax collector introduced Presumptive Tax of 15 per cent on business permits for small-scale traders whose turnover is less than Sh5 million.

The Institute of Public Finance chief executive James Muraguri told the media that by allowing county governments to charge and collect the presumptive tax, the taxman managed to net informal small businesses in counties into tax bracket.

It also plans to focus on data driven decision-making, robust intelligence adopt effective dispute resolution and strengthen debt and account management. Through the corporate strategy launched mid this week, the taxman is targeting to collect at least Sh6.1 trillion in next three years.

The tax agency missed its sixth corporate strategy revenue collection target by Sh184.8 billion. It managed only Sh4 trillion against a target of Sh4.185 trillion for the three years that ran from 2015 to 2018.

Speaking during the launch, Treasury CS Henry Rotich said the Corporate Plan focuses on the country’s development agenda as stated in the Kenya Vision 2030, the Third Medium Term Plan (MTP 2018-2022 ), the Budget Policy Statement 2018 and the Big Four agenda.

“We undertake to work with KRA and all stakeholders to continuously develop appropriate policies and review of the regulatory regimes to meet the needs of all Kenyans,” Rotich said.

On his part, commissioner general John Njiraini said the seventh Corporate Plan is designed to prioritise key national flagship drivers which project a transformed and a self-reliant nation in the years to come.

“Drivers include Vision 2030, Big Four Agenda, Third Medium Term Plan (MTP 2018-2022 ) and the 2018 Budget Policy Statement,” he said.

The World Bank in its 16th edition of Kenya Economic Update noted that even though more goods and services have been traded, very little of these economic activities have been taxed even with KRA enhancing compliance.“Although it (revenues) grew by 13.3 per cent in nominal terms in 16/17, tax revenues expanded by less than nominal GDP 14.9 per cent, hence the tax-to-GDP ratio fell to 16.9  per cent of GDP—its  lowest  level in a decade,” said the World Bank



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