The Treasury expects new tax policy measures now under implementation to generate an extra Sh60 billion, according to a new report produced by the International Monetary Fund (IMF).
With the implementation of the online i-tax initiative, there are expectations of greater compliance with pay-as-you-earn (Paye) that should raise another Sh10 billion while changes in value added tax (VAT) are projected to give an extra Sh8.1 billion.
Following the application of the 12 per cent turnover tax on real estate, the Treasury has factored in Sh4.1 billion this fiscal year, up from an average of Sh850 million realised annually in the past three years.
The turnover tax is applicable on landlords with annual rental income of Sh10 million and below since those above that are supposed to pay income tax.
The single largest amount — Sh28.4 billion — of the extra revenue is expected to come from changes in excise tax targeting cigarettes, alcoholic beverages, motor vehicles, motor cycles and fuels.
“We have taken concrete steps to collect additional revenue, through a wide range of revenue-yielding corrective measures as well as new policy initiatives,” said Treasury Cabinet Henry Rotich.
The Treasury was also to benefit from higher compliance on customs revenues following the recent adoption of the electronic single window declaration system, which means importers and exporters disclose what they are buying or selling online. This is expected to bring in an extra Sh3 billion.
The newly introduced levy on identity verification queries to the Integrated Population Registration System (IPRS) is projected to generate Sh5 billion this fiscal year. The IPRS is a central data base showing the identities of Kenyan citizens and foreign national resident in the country.
It is expected that the new measures will add one percentage point to propel total revenue ratio of 21 per cent of the GDP compared to the current 20 per cent. This is also projected to contribute to reducing the fiscal deficit that now stands at 8.7 per cent.
Mr Rotich indicated to the IMF that Kenya had faced some difficulties in revenue collection arising from low VAT and income tax receipts in the financial year that ended in June 2015.
The Kenya Revenue Authority is expected to collect a total Sh1.358 trillion this fiscal year.