Tighter scrutiny helps taxman collect Sh1trn

Tighter electronic surveillance systems helped Kenya Revenue Authority (KRA) realise Sh1.01 trillion tax collection for the year ended June 30, official data indicates.

The performance is however lower than the Sh1.08 trillion that the taxman anticipated to net over the period according to the Treasury’s budget statement for the fiscal year 20142015.

The revenue performance for the year 201415 was 3.86 per cent higher than the Sh963.8 billion collected the previous year, official updates by the Treasury showed.

“In July-December 2014, the tax agency netted Sh476.52 billion, or 45.38 per cent of the full year target. This means Sh524.48 billion was collected between January and June, with Sh202.47 billion of that being remitted in May and June as companies and individuals raced to beat the June 30 deadline for tax return filing,” the Treasury said.

In the 20112012 financial year, KRA collected Sh707.3 billion in taxes despite uncertainties ahead of the general elections in March 2013.

KRA has in recent times adopted measures such as the introduction of the electronic i-Tax surveillance system to plug revenue leaks.

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Treasury secretary Henry Rotich said ordinary revenue collections for 20152016 are expected to hit Sh1.25 trillion, aided by ongoing reforms at KRA.

“This performance will be underpinned by ongoing reforms in tax policy and revenue administration. The KRA is expected to institute measures to expand the revenue base and eliminate tax leakages.

At the moment, KRA and the government are automating and digitising most of the services and this will enhance collection and reduce revenue leakages,” he said in his budget statement to the National Assembly.

The KRA said it had intensified audits on corporate firms during the financial year, having discovered over Sh25 billion in potential taxes from about 60 international companies that had from 2008 used transfer pricing to declare losses when they had made profits.

Transfer pricing happens when multinationals sell to their parent or subsidiaries abroad at lower prices leading to declaration of lower earnings or even losses, avoiding the payment of billions in tax revenues, KRA said.

“If we have already been able to achieve annual growth rate in tax revenue of 15 per cent for the last 10 years, we should see better achievement in the future based on what we have put in place and the action that we are taking to also encourage Kenyans to partner with us,” KRA commissioner-general John Njiraini said.

The government is under pressure to increase tax collections to fund several ongoing infrastructure projects.