Friendlier taxman still elusiveMonday September 19 2022
The Kenya Revenue Authority’s (KRA) bid to be friendlier to taxpayers has been an elusive goal despite a decade long effort to soften the taxman.
KRA has been cited for intimidation and harassment of individuals and businesses in the race to catch up with tax targets, choosing to see all taxpayers as evaders until proven otherwise.
Opting for the friendlier path perhaps signifies that the KRA has been humbled by the courts over failed suits or is shaping its processes to comply with President William Ruto’s directive that it ceases using force.
“Our call to all Kenyans is for them to pay taxes as we work on ways to engage them in a friendlier manner with a lot of dialogue,” KRA commissioner general James Githii Mburu said last week following renewed efforts asking it to drop the military tax collection stance.
KRA has made several attempts t to be friendlier including a rebrand and a change of logo, but it has struggled to have its employees drop the aggressive stance and transform to become more approachable in its pursuit against tax cheats.
But as it starts another effort to be friendlier, one of the areas it will be forced to look at is its policy to coerce taxpayers with limited expertise in filing taxes through punitive penalties, in an exercise where the taxpayer is simply reminding the taxman how much he collected from them.
Alcohol manufacturers faced the most brutal side of KRA, as it moved to clear the sector of tax cheats, to create a level playing field. It has made significant strides in pushing manufacturers to fit their premises with surveillance gadgets including a mass custody flow meter, a radar to monitor what is entering their tanks, and CCTV cameras.
The taxman has been at loggerheads with brewers such as Keroche and Mount Kenya Breweries over tax compliance, with some of the legal battles resulting in workers getting laid off.
In March, Keroche Breweries chief executive Tabitha Karanja appealed to President Uhuru Kenyatta to intervene in their row with KRA over a Sh9.1 billion tax dispute. Mid this year, the troubled beer maker sent home 370 workers on indefinite unpaid leave following the protracted tax dispute.
In yet another case, tycoon Humphrey Kariuki got a reprieve in May after the high court quashed a Sh17 billion tax evasion case, terming his prosecution and that of his colleagues as unlawful.
Justice Anthony Mrima ruled that the KRA cannot be the investigator and prosecutor which he said was an encroachment of the powers of the Director of Public Prosecutions (DPP). The KRA has since filed a notice to overturn a decision that quashed charges against the billionaire.
In November 2021 Justice Weldon Korir warned that if it continues with the trend of closing businesses that are supposed to remit the tax, the KRA will soon run bankrupt and fail to meet its revenue collection targets.
Among efforts towards a friendlier image has been the proposed change of name to Kenya Revenue Service (KRS), with the concurrence that calling it “authority” makes it sound antagonising.
Treasury CS Ukur Yatani tabled the rebranding proposal during the reading of the 2022/2023 budget saying it will transform the agency’s public image and subsequently enhance tax compliance.
In January 2021, the KRA started a three-year programme dubbed Voluntary Tax Disclosure Programme (VTDP), hoping that amnesty would shore up revenue collections and bring more individuals and firms to the tax bracket in the war on evasion.
For the first time in 14 years, the KRA exceeded its revenue collection target in the financial year to June, boosted by higher collections in corporate, payroll and value-added taxes.
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