The Kenya Revenue Authority (KRA) will step up the forcible posting of its staff to businesses owned by high profile tax cheats in what promises to be the boldest crackdown on high net worth persons.
The taxman has compiled a list of companies and wealthy individuals labelled high-risk tax debtors’ and will deploy its employees to sit the accounts departments of the firms to recover unpaid taxes.
KRA has hinged this aggressive pursuit of tax cheats on the Tax Procedures Act, which empowers the agency to seek taxes directly from company sales and third parties like banks and suppliers as well as seize and auction property to recover unpaid duty.
KRA Commissioner for Domestic Taxes Department Elizabeth Meyo said those classified as high-risk debtors had ignored tax payment plans.
“Enforcement measures include posting KRA officers as resident officers within the premises of high-risk debtors to monitor daily sales and ensure taxes are being paid,” Ms Meyo said in email responses to the Business Daily.
The taxman is preparing to hire 1,000 intelligence and enforcement officers who will identify and arrest wealthy tax cheats. The agency has been allocated additional cash to hire the new staff.
Parliament’s Budget and Appropriations Committee in November asked the Treasury to provide an additional Sh2 billion to enable the taxman hire more employees. The additional staff have been given a target of raising Sh50 billion in the period ending June next year.
This follows months of investigations into rich people’s sources of income and their expenditure against their tax remittances.
KRA has also been analysing companies’ financial dealings, especially firms doing business with the national government and counties, to unearth tax cheats by matching their payments and income declared to the taxman.
“These taxpayers are now known to KRA and have been duly contacted and notified of the tax due,” say Ms Meso.
The Tax Procedures Act, which grants the taxman unfettered powers, also provides KRA with powers to freeze tax cheats’ property transactions and ultimately auction the assets to recover the unpaid tax.
Vehicles, land, houses, office blocks and workplace equipment will be on the KRA radar at a time when the taxman has stepped up the war against tax cheats. The KRA enforcement unit has been using various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority (KCCA), which reveals individuals who own aircraft.
Motor vehicle registration details are also being used to smoke out individuals who are driving high-end cars, but have little to show in terms of taxes remitted.
Kenya Power meter registrations are helping the taxman to identify landlords, some of who have been slapped with huge tax demands.
The taxman is racing to bring more people into the tax bracket, curb tax cheats and evasion in the quest to meet revenue targets that it has persistently missed in recent years.
KRA missed its collection target by Sh60.2 billion in the three months to September due to sluggish corporate earnings, reduced economic activity and freeze in hiring amid job cuts.
Internal revenues from items like fines, payments for passports and marriage fees were below target by Sh24.4 billion.
This has left the KRA and the Treasury under huge pressure to widen the tax net hence the crackdown on cheats amid growing expenditure needs, especially from county governments.