- The initiative aims to enhance tax compliance and broaden the tax base by integrating paybill numbers into virtual ETR systems
- More than two million companies currently use mobile money paybill services, yet only 200,000 are registered with physical ETRs, leading to a significant gap in revenue collection
- The ultimate goal of the initiative is to ensure fairness in tax collection across all sectors of the economy and increase government revenue by catching tax evaders more efficiently
According to Kuria, more than two million companies currently utilise mobile money paybill services, yet only 200,000 are registered with physical ETRs
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The government has unveiled a plan to convert mobile money paybill and till numbers into electronic tax registers (ETRs) by December 2025, aiming to clamp down on tax evaders and significantly boost revenue collection.
This initiative is part of a broader strategy to enhance tax compliance, especially among businesses using mobile money platforms like M-Pesa.
Broadening the tax base
Senior economic adviser to President William Ruto Moses Kuria announced this development during the KRA tax summit 2024.
He emphasised that the move would broaden the tax base by integrating paybill numbers into virtual ETR systems.
Kuria explained that the government has reached an agreement with the Kenya Revenue Authority (KRA) to implement the transition.
"We’ve agreed with the Commissioner-General that come Christmas 2024, all paybills will also be virtual ETRs for the purposes of tax collection," he stated.
Addressing tax evasion
The initiative primarily targets traders who use mobile money services to conduct their business but do not possess physical ETRs.
According to Kuria, more than two million companies currently utilise mobile money paybill services, yet only 200,000 are registered with physical ETRs.
This disparity indicates a significant gap in revenue collection, which the government hopes to bridge with the introduction of virtual ETRs.
The KRA is working closely with mobile operators such as Safaricom to integrate their systems and better track income flows.
This will allow authorities to monitor businesses that have previously evaded paying their due taxes by using mobile platforms.
Initial focus on high-earning businesses
In its initial phase, the government’s crackdown on tax evasion will focus on businesses earning more than Sh5 million annually.
This threshold will help the KRA prioritise larger revenue streams, ensuring that businesses operating above this margin are fully compliant with tax regulations.
Kuria emphasised that the ultimate goal of the initiative is to ensure fairness in tax collection across all sectors of the economy, while also increasing government revenue.
"I know there will be some noise, but there will be nowhere to hide for anybody," Kuria said
The virtual ETR system will allow the government to monitor transactions more efficiently, catching tax evaders who previously slipped through the cracks.