Tax evaders may soon be unable to leave Kenya until they fully meet their obligations to the State, a Cabinet secretary announced on Monday.
ICT secretary Fred Matiang’i said the taxman would soon start using technology to gather information it requires to determine every individual’s tax obligations and use the outcome to control movement in and out of the country.
Non-compliant taxpayers would be required to settle the tax debts on the spot or be prevented from leaving or entering the Kenya. KRA plans to enforce the new regulation at all airports, sea ports and border points.
Dr Matiang’i said his department was working with the taxman to establish measures that will cumulatively round up tax evaders. That should happen with use technology to integrate KRA’s data base with that of the Registration of Persons and Immigration.
“The end result should be that when people swipe their passports at border points, their tax information would be automatically displayed and action immediately taken,” Dr Matiang’i said.
The minister was speaking at the launch of a short message service (SMS) that enables taxpayers to monitor the status of their transactions with KRA.
The service would, for instance, enable a log book or driving licence applicant to keep pace with the process without visiting KRA offices.
Dr Matiang’i said the goal is to ultimately plug the KRA platform into the data bases of commercial banks for purposes of ensuring tax compliance.
KRA has announced plans to use third-party information such as bank accounts and land registries to assess whether tax returns that individuals and companies have filed tallied with their balances and asset values.
The Consumer Federation of Kenya (Cofek) on Monday responded to Dr Matiang’i’s announcement with a warning that the authorities should guard against imposing new tax burdens on people who are struggling to make an honest living under the guise of implementing new tax measures.
KRA is yet to make much headway in collecting the turnover tax targeted at small businesses with a turnover of between Sh500,000 and Sh5 million annually.
Cofek also reckons that KRA would be breaching privacy laws in its use of information from third parties such as banks and land registries.
Cofek secretary general Stephen Mutoro said that stopping people from exiting or entering the country because of tax queries would amount to limiting freedom of movement against the provisions of the Constitution.
Mr Mutoro said legal machinery would have to be exhausted before KRA attempts to stop anyone from travelling. He wondered what would happen to tax evaders who never travelled outside the country.
“If KRA is so determined to stop people’s freedom of movement, then it can as well stop people from leaving their houses or homes for non-payment of taxes,” he said.
“KRA will need a court order to stop anyone from leaving or entering the country. It should not push for regulations that limit people’s freedoms.”
Mr Mutoro said lack of accountability at the exchequer level had led to massive loss of taxpayer money — citing the latest Auditor-General’s report indicating misuse of loss of more than Sh300 billion in the last financial year.
The audit also revealed that some civil servants routinely get cash advances, for which never account.
KRA Commissioner-General John Njiraini said there was need to shift debate from whether tax was paid to whether it had delivered expected benefits.
“This change is necessary if our country is to avoid the kind of fiscal crises gripping the developed countries especially in Europe and North America,” said Mr Njiraini.
KRA has taken its tax education to secondary schools hoping to cultivate the culture of tax compliance in future taxpayers.
“We launched a programme aimed at spreading the taxation gospel among the school-going population. We have been encouraged by the enthusiasm with which young Kenyans have received us,” said Mr Njiraini.
Tax compliance is one of the requirements for those seeking senior public positions and in bidding for government contracts.
The government has set aside 30 per cent of its contracts for the youth aged between 18 and 35 years. Institutions, including some banks, also require evidence of tax compliance before disbursement of loans.
KRA plans to roll out a number of ICT-related initiatives designed to ease tax compliance, facilitating service delivery and curbing opportunities for corruption in the period to June 2015.
“We plan to substantially automate our processes to become fully ICT-networked by the end of sixth corporate plan in June 2018, Mr Njiraini said.
“By that time, we expect to have become a largely paperless organisation that offers taxpayers multiple avenues to access our services.”
KRA has more recently intensified its surveillance of businesses for compliance. It has, for instance, been out to ensure compliance with the new Value Added Tax (VAT) Act.
KRA’s Marketing and Communications manager Kennedy Onyonyi said 60 people had been arrested and taken to court for violation of VAT Act.
“We are continuing with the VAT law inspections. Those arrested have been fined as much as Sh500,000 for flouting the Act,” said Mr Onyonyi.
The taxman has also introduced the use of GPRS technology in manufacturing and retail outlets that relays production line information directly to its servers for real time determination of how much excise duty is due.