Ethical guidelines key as technology reshapes Kenya’s tax compliance

These innovations are not only streamlining operations but also making compliance more accurate, responsive and adaptive.

Revenue authorities around the world are integrating AI and data analytics into their compliance frameworks to build more robust, efficient, and proactive systems.

The South African Revenue Service (SARS), for instance, is leveraging AI-powered tools for tax audits, fraud detection, and inefficiency reduction, strengthening compliance and enhancing operational efficiency.

Similarly, Kenya has rolled out its electronic Tax Invoice Management System (eTIMS) – a platform designed to harnesses real-time data processing and advanced analytics to improve tax compliance and administration.

eTIMS transmits electronic invoices to the Kenya Revenue Authority (KRA) real-time, allowing for immediate validation of transactions and automated audits.

These capabilities help detect inconsistencies promptly, reducing opportunities for tax evasion and increasing tax revenue collection.

The system also uses advanced data analytics to analyse transaction trends and guide decision-making, making tax systems more transparent, resilient and data-driven.

While the integration of AI and automation into compliance processes offers clear benefits, it also raises critical concerns.

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Robust data protection is critical, as compliance systems must adhere to global standards such as the General Data Protection Regulation to safeguard taxpayer information.

Additionally, unclear accountability for AI-driven decisions could create compliance risks, making disputes more frequent.

Ethical concerns also come into play—if AI-based tax assessments introduce biases, they could lead to disputes, undermining the integrity of the system.

These concerns underscore the importance of establishing clear ethical guidelines and robust governance structures. As tax systems evolve, so too must the regulatory and ethical frameworks that support them. Ensuring transparency, fairness, and accountability will be essential to maintaining public trust.

Technology is reshaping tax compliance frameworks at a fundamental level. The promise of faster, smarter, and more reliable systems is within reach, but only if the accompanying risks are carefully managed.

Governments and businesses alike must prepare for this shift by investing in secure, transparent, and ethically sound compliance infrastructures. In the new digital age, adaptability and trust will be the cornerstones of sustainable tax administration.

The writer is a Tax Advisor with KPMG Advisory Services Limited and can be reached at [email protected]. The views and opinions expressed are those of the author