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KRA gives tax defaulters 15 days to pay up

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KRA commissioner-general John Njiraini. FILE PHOTO | NMG

The Kenya Revenue Authority (KRA) has served notices to thousands of tax defaulters, asking them to pay up outstanding penalties within a fortnight or face aggravated penalties and interests on amounts due.

“Please make payment within 15 days, failure to which the amounts will attract collection enforcement measures,” the taxman warned in letters sent out in the past two weeks.

The notices came even as some taxpayers complained that they were being targeted despite having filed their returns on time and did not have any outstanding dues, raising the prospect of disputes with the taxman.

KRA, however, said the default notices are system-generated for periods and in instances where a taxpayer has not filed a tax return by the due date as defined in law.

The taxman recently rolled out a system that tracks taxpayers’ outstanding debt (principal, penalties and interest amounts) which are then assigned to officers for follow-up and recover.

“Roll-out of this module led to the generation of default notices for all outstanding debt in taxpayers’ ledgers for periods 2015 to date," KRA said, adding that recipients of the notices should seek assistance from its contact centres for any questions or clarifications.

Meet targets

The taxman is facing a mountainous task of raising enough revenue to finance the government’s Sh2.97 trillion budget and identified defaulters as a key plank in the race to meeting the targets.

It has stepped up the hunt for workers and businessmen who fail to file tax returns or pay due taxes, imposing a Sh20,000 fine on late filing.

Between July and September this year KRA only managed to grow tax revenues by 3.7 percent over the same period last year, having collected Sh329 billion in the first quarter of this financial year compared to Sh317.4 billion last year.

Filing of tax returns has emerged as one of the taxman’s favoured avenues to net tax cheats and grow the income tax base as the agency struggles to meet collection targets.

Kenyan law requires anyone with a Personal Identification Number (PIN) to file returns annually, including a nil return.

Official data shows that 2.6 million Kenyans worked in the formal sector last year compared to 13.3 million in the informal sector.

KRA reported that more than 2.4 million workers and businesses filed their returns by the June 30 deadline, meaning thousands of businessmen and employees failed to do so.

Kenya in 2015 raised the penalty for failure to file returns to Sh20,000 from Sh1,000, but the enhanced fines took effect last year.

Hospital data

In 2016, the number of taxpayers registered on the KRA’s online platform -iTax- doubled to four million from July 2015’s figure of 1.6 million.

Most taxpayers wait until the last minute to file their returns as was the case on June 29, 2016, when 128,000 people filed their returns on a single day.

KRA commissioner-general John Njiraini has said the agency is turning to use of technology to bring more Kenyans on board and expand the tax base.

KRA announced last month that it would mine data from hospital payrolls, the National Construction Authority records and telecoms firms in its ongoing crackdown on tax cheats.

The agency is hoping that information from these sources will boost its quest to unearth undisclosed income sources and boost its revenue collection.