The Kenya Revenue Authority (KRA) will sign partnership deals with a number of county governments in a move aimed at improving revenue collection.
The partnership not only seeks to seal the loopholes in collection, but will also eliminate double taxation between the national government and devolved units, said the taxman.
KRA deputy commissioner in charge of Policy Technical Unit James Ojee said the collaboration will help in the collection of Sh1.7 trillion for the 2017/18 financial year.
“It is currently a heavy burden with the national government funding county governments. There are several levels of double taxation and gaps in terms of collection,” said Mr Ojee said in an interview.
“So far we have signed MoU with Laikipia and Kiambu counties. Our plan is to have partnership with all the counties in the long run by end of the financial year.”
KRA’s established monitoring technology, the official argued, will help counties to detect the loopholes that include tax defaulters.
“The Public Financial Management Act specifically mentions KRA as a single government collector. In the process we are in the position to sign MoU as administrative tool to operationalise that mandate,” he said.
“Through the partnership we will be able to tell those counties that file nil, but ought to file a payment returns.”
The actual partnership, which could be implemented later this fiscal year, could help counties which have traditionally relied on the National Treasury allocations to survive.
Mr Ojee said the partnerships will be based on the negotiations and agreements over the appropriate system configuration.
“We need to discuss and agree with the various counties on the specifics of the MoU. It’s not going to be similar across the board, it depends on every county and the agreed up revenue streams,” said Mr Ojee.
He said they are in talks with five counties in the western region such Kisumu, Kakamega, Vihiga, Siaya and Homa Bay.
“By the end of the day the counties will be able to get enough funding without necessarily burdening the tax payer,” he said.