The Kenya Revenue Authority (KRA) is targeting to raise more than Sh300 billion from about 11 million personal identification number (PIN) holders in the informal sector in the current financial year.
Through the Micro & Small Taxpayers (MST) Department, the authority is simplifying tax processes for Micro, Small and Medium Enterprises (MSMEs) that will increase their contribution to overall revenue collection.
Head of department George Obell said the authority is cognisant of the vital role that MSMEs play in driving economic growth, adding that KRA is focused on simplifying tax processes for MSMEs that will increase their contribution to overall revenue collection.
Commissioner Obell said MSMEs are widely recognised as the backbone of Kenya’s economy and contribute between 40 percent to 50 percent to gross domestic product (GDP) and employ a substantial majority of the workforce.
“With more than 21 million pin holders, currently only less than nine million are in our database, either filing returns or paying taxes, that is why we are coming up with several initiatives to target small-scale traders and those in the informal sector,” said Mr Obell.
The commissioner said many MSMEs have been struggling with complex tax processes, limited access to advisory services, and an often opaque compliance environment.
“Apart from leveraging on technology, we are adopting an agent model similar to what has worked well in the banking sector by opening more than 10,000 KRA agent centres across the country to complement the 136 KRA offices,” said Mr Obell.
To widen its dragnet to the majority of small traders who have, over the years, been elusive in complying with various tax provisions, the authority has lined up various initiatives to make tax compliance more accessible and manageable for small businesses.
These initiatives include comprehensive tax education and awareness campaigns to empower businesses on their tax obligations.
“KRA will also offer incentives, recognise compliant MSMEs, provide digital solutions, and collaborate with industry leaders and representatives to develop sector-specific solutions that fit seamlessly into MSME operations,” said Mr Obell.
In an interview, the commissioner said the authority is tailoring its services to the needs of small businesses to enhance voluntary tax compliance but also to foster trust between the tax authority and the entrepreneurial community.
