KRA, utility firms plan digital records to catch tax cheats

State agencies are putting together a comprehensive register incorporating physical addresses of assets and their owners in the latest attempt to nab tax cheats, detect proceeds of crime and enhance security.

ICT secretary Fred Matiang’i said the register dubbed the National Spatial Data Infrastructure Programme would involve digitising State operations to accurately locate people, businesses and organisations, including landlords, who are required to pay taxes on rental income.

“Information is scattered in various government ministries or agencies as well as county governments. We want to have a register of all assets this country has, what individuals and organisations have and map out their locations,” said Dr Matiang’i during activities to mark this year’s International Customs Day in Nairobi.

The meeting was attended by Kenya Revenue Authority (KRA) staff and clearing and forwarding agents.

The government is targeting tax collections of more than Sh1 trillion in the coming financial year but this may not be achieved in the face of widespread evasion.

READ: Treasury sets record revenue collection target for KRA

Dr Matiang’i said the register would be compiled by collating data held by utility companies, pension funds, county governments, banks and insurance companies who are custodians of some of the assets.

Despite saying the compilation had begun, Dr Matiang’i could not say how long it would take or the kind of resources required.

However, work on the unified database comes two years after the KRA said it would map properties and land across the country to facilitate the collection of taxes on rental income which has proven difficult to enforce in the fragmented segment.

“We had proposed to do the digital mapping of properties across the country. But we realised it was not our core business and we also learnt that the ministry of ICT has embarked on the exercise,” KRA Commissioner-General John Njiraini said on Monday.

The programme is is intended to integrate data bases on land, vehicles, houses, companies, and other organisations.

Besides catching tax evaders, it could deter money laundering and financing of terrorism with illicit funds believed to be usually sanitised through property transactions.

Fears over terrorism have heightened in Kenya with incidents of grenade attacks believed to be launched by Al-Shabaab and Al-Qaeda fighters following the Kenya Defence Forces’ incursion into Somalia to secure national borders and the Indian Ocean waters from pirates.

The US banks and other international banks have in recent times been pressuring Kenyan banks to improve on their know-your-customer procedures to avoid being penalised by their home regulators for money laundered through their institutions.

READ: US banks reject Kenya cheques over terror rules

The US’s Internal Revenue Service (IRS) is currently seeking to have foreign banks surrender information on account details of its citizens, some of whom it suspects of tax evasion.

Over the weekend Kenyan police called for increased vigilance against terror attacks. Last September, suspected Al-Shabaab militants raided Nairobi’s Westgate Mall, a place frequented by wealthy and middle-class Kenyans as well as nationals of western countries working or resident in Kenya.

“This plan will be rolled out across ministries. We want to live in an orderly society. It may also help to be able to know the health profile, for example, of a particular area as you will be able to tell what facilities are available where,” Dr Matiang’i said.

He added that details of the programme would be announced in two weeks.

In addition, the Postal Corporation of Kenya is working to improve the national address system to identify locations of individuals, businesses and organisations.
If successful this would see goods or mail delivered directly to people’s offices and homes as is done in many developed countries.

Digitisation of the payment system is also being done by the Treasury and the Central Bank of Kenya following an order by President Uhuru Kenyatta that paper payments, which are more prone to fraud, be phased out.

Mr Kenyatta gave the ICT ministry up to April this year to achieve the improved electronic payment system. Dr Mating’i said the upgraded system would be harmonised with those in Rwanda, Uganda, Burundi and Tanzania under the East Africa Community as a first step towards a Monetary Union.

Mr Njiraini said the KRA would improve its ICT customs operations in the next 18 months in order to increase revenue from imports and exports.

Traders have complained of losing goods at the port or having them substituted with fake or inferior ones in the case of machinery and motor vehicle parts.

“The new system will have more superior features that will aid better practices in risk management, security targeting and valuation of cargo. Moreover, the system will also provide solutions that will enhance governance in hitherto problematic areas such as customs auctions,” said Mr Njiraini.

The auctions involve physical presence of bidders but under the envisaged portal, they would be done online.

“Besides an improved taxpayer service environment, we expect these investments to generate significant additional revenue streams through the curtailment of negative business practices including tax evasion,” said Mr Njiraini.