Engage telcos on cost of daily tax payments

The Kenya Revenue Authority (KRA), under increased pressure to meet the higher collection targets set for it by the new administration, has stepped up surveillance on digital transaction platforms to stem tax cheating by individuals and suspected under-declaration of taxes by businesses.

The taxman has, for instance, recently experimented with linking its system to those of 17 betting firms in the country, allowing it real-time access to transactions and enforcement of daily remittance of taxes.

Now, it plans to extend its aggressive surveillance to the mobile money platforms with a view to reducing reliance on self-declarations by the telecom companies on data and airtime sales and transaction fees on money transfer services.

Real-time monitoring of transactions and daily remittances by the telecoms operators, which are among the biggest taxpayers, is part of the government’s plan to increase tax collection by 17 percent to Sh2.57 trillion in the fiscal year starting July.

But the taxman risks seeing its plan fail if its new tax collection methods end up saddling the businesses with costs or driving away users from their digital transaction platforms.

Tax experts are already raising concerns that linking the KRA’s I-tax system and the telecom operators’ platforms to enable daily payments may require investment in the technology to support it.

For the companies, this would amount to additional costs to their businesses and an inconvenience they could do without.

Before rolling out the digital transactions interface plan, the government should consider engaging the telecom operators on how to make it efficient and less expensive for either party.