KRA to squeeze Sh1.1tr from 2,089 large traders

The Kenya Revenue Authority (KRA) has targeted to collect Sh1.1 trillion from large taxpayers this financial year.

KRA commissioner general Humphrey Wattanga says this will be an improvement from Sh818 billion that large taxpayers contributed in revenue, representing a 9 per cent growth from the previous financial year

According to Wattanga, the authority is banking on a relationship management framework to help facilitate contribution among the large taxpayers. Large taxpayers refers to those traders who accrue an annual income of up to Sh1.3 billion. Currently, Kenya has 2,089 traders who are registered as large taxpayers from various sectors of the country’s economy.

“At KRA, our commitment is not only to collect taxes but also to support you in upholding compliance, while efficiently contributing to our nation’s economic agenda,” Wattanga said.

To facilitate this, KRA has established a dedicated office for our large taxpayers known as the ‘Large Taxpayers Office’ (LTO), which will continue to engage and partner with you through a relationship management framework.

Wattanga, who was speaking at a Nairobi hotel during an engagement with large taxpayers said this has allowed the authority to identify, manage and nurture relationships with taxpayers, paving way for more personalised services which has also allowed the taxman to address taxpayers’ concerns and enhance revenue compliance.

He said through the engagements, KRA also aims to unlock and provide feedback on the concerns raised by taxpayers, amongst them the complexity of tax laws they say negatively affects perceptions of fairness among taxpayers leading to confusion and misunderstanding, which has often led to non-compliance, perception of government accountability. This has significantly influenced taxpayers’ attitudes and the burden of taxation, with tax payers feeling that the tax burden is too high.

KRA will also audit large taxpayers who have an annual turnover of more than Sh750 million, a process that has raised concerns among large taxpayers, as audits can be time-consuming and costly.

Despite a significant growth in the Gross Domestic Product (GDP) in the last five years, KRA has been underperforming in tax collection and is under intense pressure to collect a total of Sh3 trillion in the Financial Year 2023/24, and another Sh4 trillion in the medium term, to facilitate the Kenya Kwanza administration’s economic turnaround plan.

The government is banking on this revenue to stir growth through development projects in infrastructure, (Sh823 billion), education (Sh635 billion), micro, small and medium enterprises (MSME) (398 billion), healthcare (Sh259 billion), agriculture (Sh250 billion) in the next five years. This is estimated to cost Sh2.67 trillion.

To rope in the MSMEs into the tax bracket, the taxman is using several strategies to encourage tax compliance and has also pledged to address challenges facing the informal sector so as to incentivise and onboard more sector players.

The sector is estimated to employ about 15 million people, accounting for 83 per cent of the country’s total labour force and has a great tax potential.

KRA also intends to work with the National Treasury to establish policies that will simplify, harmonise and reduce the multiplicity of taxes obligated to the informal sector.

Through the Finance Act 2023, KRA introduced a tax amnesty programme that allows taxpayers to apply for a waiver of penalties and interest accrued until December 31, 2022.

This programme that runs between September 2023 and June 2024 has so far netted Sh3.4 billion in revenue. More than 17,000 taxpayers have so far applied for tax amnesty and are expected to remit Sh10.5 billion.