The Kenya Revenue Authority (KRA) has presented proposals before the Treasury, which if accepted will see several businesses taxed for every transaction they make.
In a bid to bridge its revenue gaps, KRA will be targeting online businesses, service providers, and members of professional organizations that have been evading paying income taxes.
“Most money transactions are done on digital platforms. There is need for more clarity in the law on how these transactions can be taxed. This is to ensure that we fully capture the sector. We propose provisions to support taxation and collection of tax from economic activities carried over digital platforms,” KRA said in its proposals.
KRA Commissioner General John Njiraini told the National Assembly Finance and Planning committee that in the past, service providers such as those in the security sector have dodged remitting their taxes.
“Under the VAT Act, all services are subjected to the tax regime. For income tax, we have confined ourselves to management and professional services leaving loopholes that allow other service providers to escape the tax net,” said KRA in its proposals.
Members of professional organizations will have to acquire a KRA pin number before they can register or renew their membership. For example agents or vendors of mobile service providers will have to acquire a pin number so that they can be added to the tax bracket.
If the proposals go through, betting companies will be expected to pay 10 per cent exercise duty.
“Betting and other related activities have negative effects. The taxes currently being levied are not adequate,” Njiraini told the planning and finance committee.
Tax defaulters will not also be spared as the tax collection body is seeking permission to list them on Credit Reference Bureau (CRB). This will deny the defaulters the liberty of accessing any credit and certain financial services until they comply.
If treasury gives a go ahead to KRA, the proposals will be included in the Finance Bill which lists the avenues that the government can use to raise revenue.