The revamped turnover tax easy to administer

One of the principles of effective tax administration is simplicity. Tax processes that are simple are a sure bet on enhanced revenue collection and tax compliance. However, as experts argue, the definition of simplicity should take into account the nature of a given sector. In Kenya, for instance, we have two major sectoral segmentations: the formal and the informal.

The latter sector, despite its vibrancy and substantial contribution to the gross domestic product (GDP), has had very little to write home about in terms of revenue to the government. The current tax burden is largely shouldered by the formal sector which employs only two to three million out of 16 million working Kenyans. This translates to less than 20 percent of the population that earn an income remitting their fair share of taxes.