Treasury proposes the Data Protection Act of 2019 be amended to give special exemption to the Kenya Revenue Authority (KRA). The proposed exemptions will enable KRA to have easier access to data and information from third parties like telcos and banks. These new proposals are part of Kenya’s Draft Medium-term Debt Strategy for the period 2024/25 – 2026/27 that has been made public.
The proposal comes swiftly after the introduction of a data management & reporting system by KRA. This was introduced after the amendment of the Tax Procedures Act 2015 in the new Finance Act 2023.
In order to boost To boost tax revenue collection, Kenya’s National Treasury proposes the following integrations:
- Integration of tax administration systems with those of the Integrated Population Registry (IPRS).
- Integration of tax administration systems with telcos & banks.
- Integration of KRA tax administration systems with betting & gaming systems.
Additionally, the Draft Medium-term debt strategy proposes the use of mobile applications or USSD codes to simplify tax payment and filing of returns. This appears to be part of a continued effort by the government to digitize all revenue collection processes.
KRA to Collect More VAT
Treasury is also proposing an amendment to the Digital Service Tax (DST). In the proposal, the treasury would like the tax to apply not just to non-residents but to residents too. The digital tax is a 1.5% tax imposed on the total value of digital services offered. Initially, the proposed amendment was part of the Finance Act 2020 but was removed.
Part of the debt strategy is to intensify taxpayer education to ensure that taxpayers understand their tax obligations and the importance of paying taxes. This comes as the government is looking to widen its tax base. The Medium-term Debt Strategy is proposing other new taxes including taxes that will affect agriculture, car owners, alcoholic beverages, and much more.
What stood out is the proposal to increase Value Added Tax (VAT). VAT currently set at 16% is set to be increased to 18%. This will bring Kenya’s VAT at par with its neighbours Uganda and Tanzania.
Kenyans have until Oct 6th, 2023 to submit comments on the proposals from Treasury. The comments can be shared via email: [email protected].