The Kenya Revenue Authority (KRA) will conduct a census of landlords’ properties and seek direct access to M-Pesa transactions in efforts to catch tax cheats and raise an additional Sh375 billion for the year starting July.
The Treasury has disclosed in its budget planning document for the new fiscal year that the KRA’s tax system will be integrated with those of telecommunications firms.
This will offer the authority unrestricted access to taxpayers’ bank and mobile money accounts as part of the efforts to catch tax cheats and improve revenue collection as its targets continue to rise.
The KRA will conduct a census of rental properties and link its tax system with the digital land registry to smoke out landlords not paying their full share of taxes.
Landlords with annual rental income of between Sh288,000 (Sh24,000 per month) and Sh15 million (Sh1.25 million per month) are required to file a monthly tax return declaring the gross earnings rent from which tax payable is computed at the rate of 10 percent.
“Implementation of rental income tax measures by mapping rental properties. This will be achieved through enhanced field data analysis mopping up, integration of itax with the National Lands Information Management System and use of a mobile App,” says the Treasury in the budget documents.
The KRA is buying a geographical information system (GIS) that will help map all the buildings in the country.
The taxman is racing to bring more people into the tax bracket and curb tax cheating and evasion in the quest to meet targets.
The Treasury wants the KRA to collect Sh2.566 trillion from taxes in the year starting July from the forecast Sh2.191 trillion, representing an extra Sh375 billion.
This will help the State meet its ambition of reducing the reliance on borrowing to fund the budget. It seeks to raise Sh743.3 billion in the next fiscal year from the current Sh877.3 billion.
“KRA will implement, among others, the following measures…integration of the KRA tax system with the Telecommunication companies,” said the Treasury.
The M-Pesa records will help the State identify individuals and firms whose tax payments are not in tandem with the cash moving through their mobile phones.
The unfettered access to M-Pesa will spare KRA the burden of having to seek court orders every time it wants to access an individual’s account but tax experts and lawyers have warned of fierce legal opposition to the invasion of people’s privacy.
Safaricom, in 2016, rejected the taxman’s quest to gain unrestricted access to its customers’ mobile money records, citing a lack of legal backing.
Access to Safaricom’s M-Pesa transactions would give the taxman a treasure trove of financial information for use in tracking tax evaders.
Safaricom had 55.6 million active customers in September.
Mobile money users transacted a total of Sh7.2 trillion last year, double the national budget.
The KRA is flagging individuals that have been hiding their sources of income while engaging in luxury spending and accumulation of property, including the purchase of homes and big cars.
The agency has been using various databases to pursue suspected tax cheats, among them bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority, which reveal individuals who own assets such as helicopters.
The KRA is also linked to the government’s e-procurement system or the Integrated Financial Management Information System, making it easier to pursue suppliers earning billions of shillings from the county and national government tenders without paying their share of taxes.
Kenya Power meter registrations are helping the taxman to identify landlords, some of whom have been slapped with huge tax demands.
Car registration details are also being used to smoke out individuals who have little to show in terms of taxes remitted.
KRA staff will start wearing body-worn cameras in the latest bid to curb tax cheating and crack down on staff bribery that abets duty evasion.
The cameras, popularly known as bodycams, will be used mainly by staff who work in the domestic tax department and customs and border control.
Some KRA staff have been accused of helping to fraudulently clear cargo and alter tax returns to help people dodge duty payments.
This has seen the workers amass multimillion-shilling assets, including real estate and posh cars that are not consistent with their pay.
“Rollout of measures at the Customs and Border Control leveraging on technology and enhanced data analytics will enhance revenue per unit,” says the Treasury.