Investigators are looking at an insider job at the Kenya Revenue Authority (KRA) as a possible cause of a six-day tax system outage in November, resulting in a rare fall in collections.
Treasury Cabinet Secretary John Mbadi said the system failure had a major impact on revenue collections when the country had started recovering from the effect of youth-led anti-government protests which had hit economic activity hardest.
KRA’s Integrated Customs Management System (iCMS) failed early November, halting clearance of goods through entry points such as the Port of Mombasa, the Jomo Kenyatta International Airport and inland containerd depots and container freight stations (CFSs).
Traders were stuck with outbound and inbound cargo, including top exports such as tea, because they could not lodge documents onto iCMS, Kenya’s sole clearance system.
Mr Mbadi reckons investigations are ongoing over the outage amid claims KRA staff sabotaged the tax collection system.
“They [KRA] are still doing their investigations. Some people are talking of some insider job. I still don’t know, but I am waiting for the results that put us under a lot of stress at that time,” Mr Mbadi said on Fixing the Nation show which debuted on Nation Media Group’s TV, radio and digital platforms Monday.
“We had KRA systems that failed for six days without collecting taxes [in November]. That led us to not meeting the targets.”
The KRA received Sh160.32 billion in taxes, excluding non-tax revenues such as agency fees and levies, in November, representing a rare 1.40 percent, or Sh2.28 billion, drop compared with the same period a year earlier.
Apart from November, the KRA posted a fall in tax revenues in August, which mirrored the impact of youth-led disruptions on economic activity, according to Treasury data.
KRA appeared to blame an aging system for the outage.
“This specific outage was caused by the aging infrastructure challenges and therefore KRA is in the process of replacing this infrastructure,” the KRA said in responses to the Business Daily.
“This system has served the organisation well and like any other system it’s time for an upgrade.”
State House has previously accused the tax collection agency’s staff of cutting government revenue by engaging in corruption, colluding with tax evaders and taking bribes.
President William Ruto also accused KRA staff of resisting and sabotaging attempts to digitise revenue collection in the past, to prevent the government from sealing loopholes.
In terms of tax collected as a proportion of annual economic output, Kenya has been underperforming other nations like South Africa as it struggles to widen the tax net.
The iCMS connects KRA’s systems to those of taxpayers and was introduced to achieve faster cargo clearance.
“The daily service collections were affected and this were the trade taxes specifically. Income taxes are collected on due days and thus were not greatly affected,” said the KRA on the impact of the November outage.
