In Kenya’s Medium-term Debt Strategy for the period 2024/25 – 2026/27 Treasury proposed that the Kenya Revenue Authority (KRA) be exempted from the privacy boundaries created by the Data Protection Act of 2019. Now before even that proposal becomes law, the tax authority is hunting Kenyan’s via 3rd party data. KRA is relying on an amendment to the Tax Procedures Act of 2015, through the Finance Act, of 2016. This change in the law gave the taxman legal leeway to access electronic data on taxpayers from third parties.
As each day passes, more government services are digitized and are getting onboarded on eCiziten. The move by the state to ease service access appears to be a double-edged sword. Digitization provides for better data collection and a verifiable paper trail. KRA, which recently failed to hit its revenue collection target, is looking to take advantage of the data trove that is eCitizen to squeeze more revenue from Kenyans.
Kenyans turn to the platform to access services from multiple state agencies. Thus, eCitizen gives the tax authority access to information on business ownership, land ownership, and vehicle ownership to name but a few assets. Speaking to the Daily Nation, a KRA representative said that the authority will now be able to reconcile records on eCitizen with data submitted by taxpayers. Going forward, all the bills one pays, import records, and all kinds of registrations made on eCitizen will be subject to state scrutiny as the country seeks to grow its revenue base. In the event your transactions on eCitizen don’t tally with your tax returns, you could be in trouble with the state.
After physically deploying door-to-door tax agents, KRA is strengthening its virtual efforts in tax collection. Already, the tax agents have forced many business owners to abandon digital payment options. Customers have also been mindful of how often they use mobile money as operators pass on tax cost to clients. A recent industry survey shows Kenya imposes the highest combined tax on mobile usage in Africa.
KRA Awaits at Entry Points
Since taking power a year ago, the current Kenya government has consistently devised new ways to collect more taxes. The tax authority has recently found itself grappling to interpret a law that requires Kenyans to declare items worth above US$ 500 at the country’s points of entry. Citing harassment by tax officials from the state, Kenyans claim the law does not make much sense, especially in the current economic climate.
The tax authority states that items exceeding the limit are subject to import duty, value-added tax, and excise duty based on the law. For a government that is pushing digital transformation, Kenyans were quick to point out the irony of enforcing such a law at a time when US$500 represents the price of a mid-range mobile phone or a decent laptop.