How data and spy tools handed KRA an extra Sh324bn

Kenya Revenue Authority (KRA) Commissioner-General Githii Mburu. PHOTO | JEFF ANGOTE | NMG 

The Kenya Revenue Authority netted Sh324.81 billion more in tax receipts in 11 months through May than a similar period last fiscal year on the back of aggressive use of data to catch cheats, Treasury statistics show.

Treasury secretary Ukur Yatani says in the latest exchequer filings that total tax receipts amounted to nearly Sh1.64 trillion between July 2021 and May 2022 compared with Sh1.31 trillion in the prior year.

The 24.74 percent year-on-year jump in tax collections has come in a financial year the taxman said it had deployed “our robust Intelligence Network to penetrate corruption and tax evasion cartels” amid a recovering economy.

“Some people have made it their business model where tax evasion is part of their profitability. Those are people we call hardcore tax evaders,” Terra Saidimu, the commissioner for Intelligence and Strategic Operations unit at the KRA, told the Business Daily in an earlier interview on strategy to meet tax goal for this fiscal year.

“Once we have established there is a deliberate tax evasion, we pass it on to our investigators who investigate and, in some cases, recover taxes or prosecute. But prosecution does not negate paying taxes.”

The Treasury data, published last Friday, indicate the KRA is ahead of prorated target for the 11-month period by Sh41.90 billion.

This means the taxman — which collected Sh181.74 billion in May — needs to net Sh103.19 billion this month to hit the revised goal of Sh1.74 trillion this fiscal year.

KRA Commissioner General Githii Mburu said last week that Times Towers expects to exceed the total revenue target —including agency revenue it collects on behalf of other state entities like stamp duty — by Sh140 billion.

Tax consultants said they expect the KRA to be more aggressive on wealthy tax evaders in coming months after it announced plans to set up a digital forensic laboratory to mine data from records on taxpayers’ computers and smartphones.

This will include data from “e-mails, texts, video, audio, image files, and other transactional data on hard disks and other storage media”, the KRA said in a document inviting bids from potential suppliers last month.

“When KRA put up an RFP (request for proposal) for a cyber-security solution for snooping on your social media account like WhatsApp status, it means lifestyle audit will be a thing that KRA will rely on a lot to raise revenue,” said Philip Muema, a partner at a tax and business advisory firm, Andersen Kenya.

“It will be a bit tough for businesses … because there will be increased scrutiny from a revenue perspective. More people will be brought into the tax net.”

Times Towers is increasingly relying on information shared between its detectives and sleuths attached to other enforcement and intelligence agencies to bust suspected tax evasion schemes.

These include National Intelligence Service, Directorate of Criminal Investigations, Financial Reporting Centre, Ethics and Anti-Corruption Commission and Office of the Director of Public Prosecutions (ODPP).

“We are a rich country and that’s the reality. We just need to tighten the screws and close revenue leakages,” Mr Muema said.

Tax experts and business leaders have over the years complained that Kenya’s tax regime over-burdens a few persons and firms in the formal sector with increased taxes.

For example, an estimated 6.1 million taxpayers had been registered on the electronic tax payment and filing platform, iTax, by June 2021 against more than 19.6 million registered voters in the 2017 presidential poll.

The number of voters has crossed 22 million mark this year, according to provisional statistics by the Independent Electoral and Boundaries Commission.

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Note: The results are not exact but very close to the actual.