Individual taxpayers as well as businesses who owe the taxman nearly Sh250 billion will from this week see their assets seized and auctioned and their personal identification numbers (PINs) disabled in the largest crackdown on tax cheats.
In addition, they risk having their cargo blocked at the Port of Mombasa, thus further hurting their ability to do business.
The Kenya Revenue Authority (KRA) had given the individuals and companies up to last Saturday to clear the dues or make payment plans, failing which they would face a raft of enforcement actions.
KRA is basing the stiff measures on the Tax Procedures Act of 2015, which allows the taxman to issue travel bans on suspected tax cheats, collect duty directly from suppliers and bankers of defaulters and prosecute those in arrears.
“All taxpayers with outstanding tax liabilities and have not paid or entered payment plans to do so by 20th of June 2020, failure to which appropriate enforcement measures will be instituted against the outstanding debt,” said a notice signed by Elizabeth Meyo, KRA’s Commissioner for Domestic Taxes Department.
“Affected taxpayers are advised to get in touch with Tax Service Office in order to settle their tax debts or propose payment plans.”
Should KRA make good its threat to deregister the PINs, this will mean that the affected individuals and businesses will be cut off from making transactions that require proof of active registration as a taxpayer.
The list of transactions that requires proof of an active PIN certificate includes registration of land titles, approval of development plans, registration, transfer and licensing of motor vehicles and registration of business names and companies.
Others are underwriting of insurance policies, customs clearing and forwarding, payment of deposits for power connections, supplying goods and services to the State, as well as opening accounts with financial institutions.
Employers would also be committing a crime if they wire salaries to the accounts of workers whose PINs have been deactivated.
KRA, which is under pressure to increase tax collection, has now upped the ante, seeking to cripple defaulting taxpayers’ transactions in a race to force them to settle their dues.
The projected revenue from the KRA is expected at Sh1.621 trillion for the year starting July amid economic shocks that look set to complicate the taxman’s efforts. KRA has hired a team of auctioneers to help it track the properties of the individuals and companies who have failed to pay the taxes due.
Vehicles, land, homes, 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.
CEOs and other top managers of tax-evading companies could be barred from flying out of the country if the restrictions on flights imposed to limit spread of Covid-19 are lifted. Individuals and companies targeted are those that have lost disputes against the KRA in court or at the tax tribunal.
KRA detectives have identified wealthy individuals and companies who owe it an estimated Sh250 billion in what promises to be the biggest crackdown on high net-worth persons.
The taxman’s intelligence and strategic operations unit has been investigating rich people’s sources of income and their expenditure against their tax remittances.
It has also been analysing companies’ financial dealings, especially firms doing business with the government and counties, to unearth tax cheats by matching their payments and income declared to KRA.
The crackdown follows an order from President Uhuru Kenyatta for KRA to keep a watch on high net-worth individuals whose lifestyles are not in tandem with the taxes they pay.
KRA’s enforcement unit has been using various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power #ticker:KPLC records, water bills and data from the Kenya Civil Aviation Authority (KCCA), which reveals individuals who own aircraft.
Motor registration details are also being used to smoke out individuals who are driving high-end vehicles, but have little to show in terms of taxes remitted. Kenya Power meter registrations are helping the taxman identify landlords, some of who have been slapped with huge tax demands.