Economy

KRA now bets on third party data to net tax evaders

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The Kenya Revenue Authority headquarters at Times Towers. KRA is placing its hopes on third-party data to nab tax evaders. FILE

The Kenya Revenue Authority (KRA) is placing its hopes on third-party data including that of commercial banks and property registrars to nab tax evaders.

KRA Commissioner-General John Njiraini said Monday the taxman would start comparing returns from transaction filings and bank balances.

“You may find a person is a major importer, but this is not declared or is not matched by tax declarations. Use of third-party data is going to be the next phase of tax reforms,” said Mr Njiraini.

Although he did not give a timeframe, the electronic tax system (i-tax) has already enrolled 15 banks through which taxpayers can register and file returns. The system is also being used to generate payment authorisation (e-slips) documents, which are presented to commercial banks when paying taxes.

(READ: KRA set to make online filing of taxes mandatory)

Mr Njiraini said the plan is to extend the exercise to all banks, besides recruiting other institutions such as companies, land registries, import duty declarations, land transfers, company and individual personal accounts.

KRA has traditional relied on voluntary filing of returns and whistleblowers to assess tax compliance.

Mr Njiraini, however, said tax administration was being hampered by slow adoption of e-commerce by banks.

Currently, taxpayers register and file returns online from the comfort of their offices. They then take the e-slip to a bank for the information to be captured, allowing remittance of taxes to KRA.

“Banks are not yet ready for e-commerce. They are not ready to make electronic payments such that you can make returns and then pay tax without having to leave your office,” said Mr Njiraini.

He added that there were times money would be paid but not reach KRA because of fraud.

The KRA boss was responding to a query from the Business Daily after releasing results of the tax collection performance at the organisation’s offices on Monday.

The taxman raised Sh228 billion overall collections in the first quarter of the 2013/14 fiscal year, a 24 per cent improvement from the same period last year.

The revenue body is also piloting a short-message service that will allow users to follow up on transactions including driving licence and logbook, customs entries, clearing agents, PIN validation, tax compliance certificate validation.

KRA is also testing the National Single Window system that will bring all international trade services under one roof through integration with the customs service system SIMBA.

“The major benefits expected for business are through more efficient processing of transactions,” said Mr Njiraini.