The High Court last week ruled in favour of the taxman in a case challenging the constitutionality of the Kenya Revenue Authority’s (KRA) enforcement powers under the Tax Procedure Act.
In contention were Section 57 on admissibility of evidence, Section 58 on power to inspect goods, records etc, Section 59 on production of records, and Section 99 on offences relating to enforcement powers.
The court placed the burden of proof on a tax decision explicitly on the taxpayer to prove that a decision by the taxman is incorrect as well as giving it a free hand to compel taxpayers to provide information in respect to their tax liabilities.
To that extent, the court ruling is sound in judgement because tax payment is a statutory obligation therefore it’s upon the taxpayer to make sure he/she adheres to his/her statutory obligations.
At the same time, its within KRA’s powers to enforce that statutory obligation which means it has make a fair decision in coming up with tax liabilities of a taxpayer, therefore it has to obtain all essential information on the taxpayer’s financial activity.
But the crux of the debate is in Section 59 which gives the taxman unfettered powers to directly access financial records in this case bank statements and mobile money transactions from the relevant institutions.
The constitutional right to privacy and protection of personal data is fundamental and inalienable – meaning it’s a right to informational self-determination entitling a taxpayer to decide when and what information about his/her personal life can be revealed to a third party.
Now, this is not to say that taxpayer’s information should remain secret, but the taxpayer has the right to be informed of the content of the information needed to be exchanged prior.
This will preserve and safeguard the taxpayers constitutional right to privacy whilst at the same time provide the taxman with the necessary enforcement powers.
Therefore, the court allowing direct access to personal data by the taxman was wrong bearing in mind Kenya has just enacted a data privacy law that provides the legal framework on access to personal data by third parties.
Moving on, the application of this stringent enforcement laws subject to misuse is the other debate. On Monday last week, that was before this ruling, I happened to be at an apparel shop and there were three women from KRA visiting.
Now, the sales lady kept telling them that she was not conversant with the shop’s tax obligations and since she was not in the right place to provide the needed tax information, they should wait for the owner who wasn’t far away. But the more she explained herself the more the room got heated to the extent that the tax officials threatened to close the shop. I got concerned because their behaviour resembled that of the Nairobi City County Inspectorate officials.
The tax officials decided to fine and summon the owner of the shop to appear before them on Wednesday. Then came the signing of the summons where the sales lady was required to append accepting receipt.
Just like how many would have reacted, she declined saying she could not take liability of the shop since she was not the owner.
When she called he boss, he wasn’t picking, so she turned to me for advice. I was hesitant since it had been a messy engagement but chose to ask them one question: Would the summon for Wednesday stand whether she signed it or not?
It was now my turn to be in hot soup. I was pelted with all manner of unruly words on why I was getting concerned yet I should mind my business. It was until they told the woman that the summon would happen at Times Tower Enforcement Department on 17th floor when leaving that I considered them tax officials, my conclusion was that these were imposters.
If this is the kind of enforcement, we are looking at from KRA, then the taxpayer is in more trouble and should be worried after this ruling.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
