The Kenya Revenue Authority (KRA) is set for an additional Sh10 billion budget allocation to boost identification and capture of wealthy tax cheats in what promises to be the biggest crackdown yet on high-net-worth individuals and firms.
The allocations follow recommendations by the National Assembly Finance Committee to review the law and allocate KRA at least two percent of the taxes it collects to intensify revenue collection.
This will raise the taxman’s budget to Sh32 billion given it is expected to collect Sh1.6 trillion this year.
The Treasury had budgeted to allocate KRA Sh21.3 billion in the year starting July, up from Sh20.8 billion it got in the current year.
The additional funds will give the KRA more muscle in its fight against tax cheats, allowing it to acquire equipment and hire more staff, especially enforcement and compliance workers.
The KRA seeks to hire 1,000 workers who will be investigating rich people’s sources of income and expenditure against their tax remittances.
Some will work on intelligence reports to seek recovery of unpaid taxes with the additional staff being given a target of raising billions of shillings in the new financial year.
Amendments to the Finance Bill by the National Assembly’s Finance Committee have recommended changes to the KRA Act to state that the allocation should be “at least two percent of the revenue actually collected by the Authority in the previous financial year”, but also that it should not exceed this percent
age. The law currently states that the allocation should not exceed two percent, without assigning a floor, leading to the taxman getting about 1.5 percent of the revenue collected the previous year.
The same parameters will apply when the KRA collects revenue on behalf of county governments, which will open another revenue stream for the agency. “The amendment is to ensure that the KRA is allocated a minimum of two percent of the revenue collected in the previous financial year,” said the committee in the report tabled on Thursday.
“The amendment also provides that the KRA may receive a commission of not more than two percent of the revenue collected on behalf of a county government and that this should form part of the funds of the authority.”
MPs will this week vote on the recommendations of the House committee before the President signs the new Finance Bill into law ahead of July 1
The KRA has been seeking additional funds over the years to enhance its capacity to collect revenue amid ever-rising targets that have not been met for some time.
The agency has been intensifying its crackdown on tax cheats using various databases, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority (KCCA), which reveals individuals who own assets such as aircraft.