iTax is a big step forward but has long way to go

When the Kenya Revenue Authority (KRA) launched the online tax filing system, iTax in 2013 corporates and individuals heaved a sigh of relief that the laborious process of paying taxes would be a thing of the past. Indeed the long queues at Times Towers have reduced significantly since the system’s inception, an evident that it has largely met its objective.

Tax experts, however, say iTax still has a long way to go before becoming a fully automated platform. Consultants at the PricewaterhouseCoopers (PwC) say the system should be configured to allow corporates upload data directly from their systems to achieve full automation.

Allowing companies to create a system that can upload financial statements through an Application Programme Interface (API), the PwC experts argue, will help companies reduce the time they spend computing the financial statements and typing the same into the system.

While businesses and individuals are now able to file returns by simply logging onto the KRA system, they still have to print out financial statements and type them into the iTax.

“The mistake that was made initially was that KRA just converted the paper-based documents and created a computer interface such that instead of doing a manual form, you are actually (electronically) typing into the system the same document you used to write on,” said PwC head of tax East Africa, Steve Okello.

“It takes time to type and, in addition, there’s more information that you are required now to type from your hard-copy financial statement into iTax. Before you just supplied the hard copy.”

KRA commissioner-general John Njiraini admits the system’s shortcomings saying the agency is progressively improving and upgrading it to make it more taxpayer-friendly.

“We have noted some of those issues (being raised by the companies), and we have been addressing them,” Mr Njiraini said on January 16.

“We have a full series of enhancements that we are doing to iTax that are already ongoing.”

Despite these challenges, the phased rollout of the iTax system since 2013 has been transformative, cutting the time businesses spend to make various taxes, the World Bank Group’s Ease of Doing Business Report 2019 shows.

The annual report released last October said the time companies spend to comply with taxes in a year has dropped to 179.5 hours this year from 186 hours in 2018 and 213.5 hours in 2014.

The report shows that Kenyan businesses are now spending less time in filing taxes than their counterparts in Uganda, Tanzania, South Sudan and Burundi.

Kenya, whose global ranking improved to 91 from 92 out of 190 countries in the PwC survey, has also reduced the number of tax payments to 25 in 2019 from 26 in 2018 and 30 in 2014, thanks to consolidation of all tax administrative procedures in 2015.

Kenya’s score in paying taxes in 2019 is, however, unchanged at 72.37 out of 100 compared with 2018 but higher than 69.01 in 2014, the World Bank’s ranking shows.

Mr Okello says the taxman should work towards making filing of taxes to fully go online to enhance efficiency.

“On a scale of one to 10, iTax is still around five in terms efficiency of the system. We are still typing onto an interface … but we should have a system where you just put a programme remotely and it just loads,” he said.

“If KRA can open up their system, I could create a robotic process such that the figures are transported from my soft-copy financial system straight into the iTax where I don’t have to do manual interface (typing).”

The linkage between iTax and company systems for filing of tax, Mr Okello added, will cut downtimes on the system which happens when many taxpayers log on to it at the same time, usually to beat filing deadlines. During such periods of heavy traffic, the iTax system momentarily suffers downtimes.

If that (100 percent online tax filing) is done, the system will be super efficiency and there will be no downtime because right now what tends to happen is on deadline days is that everyone is trying to populate their information into the iTax and the system breaks down,” Mr Okello said.

“But when you do uploads, there’s less of that because what takes me 15 minutes to type, the computer can do it in 30 seconds.”

Latest major iTax system downtime occurred in mid-December when taxpayers were rushing to beat the deadline for filing various taxes which falls on 20th of every month.

At the time the taxman confirmed the existence of the hitch on its social media platform after it asked those unable to file returns to reach out to the agency for assistance.

Property owners filing monthly rental income were the hardest hit.

"Having issues filing your monthly returns?" KRA posed. "Kindly share your email address via inbox/direct message so that we can send you the monthly rental income Excel sheet to facilitate your filing of tax returns."

Mr Njiraini said the iTax system is being enhanced to upload data from third-party systems starting with Pay As You Earn (PAYE) tax filings.

“Those of you who are employees, when your employer do PAYE declarations, that information comes with your PIN and iTax is able to pick it and place it in your account,” he said.

“When it comes to that period when everybody rushes to make returns and he does not have any other source of income, he does not need to key in anything other than the PIN and the system pulls out that information, he reviews it and accepts.”

The taxman, he added, has been able to detect fraud cases by employers when the staff data they filed is reviewed by employees when filing returns.

“Employees who have been paying PAYE go into the system they realise their employer has not remitted and KRA is sending them a demand. So it’s helping us detect fraud by dishonest employers.”