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The government plans to roll out the latest tax system for small-scale traders whose annual turnover is below Ksh5 million.
Smale-scale traders will be required to pay a new presumptive tax computed at the rate of 15 per cent of their annual permit fee.
New system completed
Kenya Revenue Authority completed the new system which is expected to incorporate taxpayers outside the net.
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Small-scale traders at CBD Nairobi
An approximated 2.7 million informal traders, including mama mbogas and cyber café operators, are targeted in the new taxation.
KRA anticipates that the small-scale traders will pay at least Ksh5 billion this year.
Counties and KRA battle
Although the new revenue was expected to begin on Wednesday, differences between KRA and county governments on how collections will be made, developed.
Counties argued that they are not profiting from the tax and don’t see the reason they should collect it on behalf of KRA.
Some officials from the Council of Governors (CoG) accused KRA of taking too many liberties by feigning that counties would collect the levies without formal communication.
Broaden Tax Bracket
Even with the lack of guidelines from KRA, the reprieve for the traders is very minimal given that the projected levies to be collected have been budgeted for.
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Times Tower building in Nairobi, KRA Headquarters
The government's resolve is the latest attempt to broaden the tax bracket, a year after the State failed to implement a similar levy known as a turnover tax.