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KRA promises to help the informal sector uphold compliance, tap industry tax base

President William Ruto chairs Cabinet meeting at Kisumu State Lodge on October 9, 2023
  • .The Kenyan Revenue Authourity is looking to incentivize and onboard players in the informal sector.
  • This was revealed at the 2023 Annual Tax Summit.
  • Tax experts highlighted the necessity of formulating policies to help stablilize the tax system.

The Kenyan Revenue Authourity (KRA) has pledged to address challenges faced by informal sector in a bid to incentivize and onboard the sector players into the tax net.

KRA Commissioner General Mr. Humphrey Wattanga stated at the 2023 Annual Tax Summit that the sector, which is estimated to employ 15 million people and account for 83 percent of the nation's total labor force, has significant tax potential and should be supported to uphold compliance.

“One of the initiatives under KRA’s tax base expansion programme is recruiting the informal sector into the tax bracket, the majority of whom are the MSMEs. This, therefore, informs the need to design strategies and policy interventions to enable KRA tap this sector into the tax bracket.” Mr Wattanga stated.

The KRA also revealed that it will collaborate with National Treasury to develop policies that would harmonize, streamline, and lessen the number of taxes imposed on the informal sector. According to Mr. Wattanga, KRA will train traders to understand the importance of paying taxes.

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Tax experts and technocrats highlighted the necessity of formulating policies that would result in a stable and predictable tax system during the 2023 Annual Tax Summit. They said that doing this will raise tax employees' spirits and therefore encourage justice, openness, and accountability. Additionally, it will make taxes simpler and easier.

Mr James Muhati, Principal Secretary for Economic Planning, told attendees at the event that robust tax systems will guarantee revenue recovery in the face of external economic shocks. He claims that such systems can adapt to changing tax methods and situations both locally and globally.

The PS stated that a good system can only be built via policy revision. He went on to say that such methods can help close revenue gaps and contribute to the realization of a comprehensive domestic resource mobilization goal.

"Enhancement of tax policies enables the Government to grow tax revenue, provide legal framework for introducing tax incentives, provide guidance, ensure certainty and establish coherence," said the Prime Minister.

Mr Humphrey Wattanga, Commissioner General, praised the tax experts for offering ideas and proposals targeted at increasing revenue mobilization. He stated that the KRA had taken notice of their proposals and would take them into account while administering taxation.

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“Participants have recommended regular reviewing and revision of tax laws to promote predictability and accountability of the tax system. KRA will continue working with the National Treasury to develop policies aimed at creating a conducive environment for businesses to grow. I believe that these recommendations will help us enhance voluntary tax compliance and support our country’s development agenda,” said Mr Wattanga.

The Summit, held each year in October, provides a forum for tax professionals, policymakers, public officials, technocrats, civil society, commercial sector actors, and academics, among other stakeholders, to discuss pressing issues affecting tax systems. Participants come from all across the country and the world.

The Summit's goal is to enhance tax systems in Africa and beyond by exchanging ideas and innovations, boosting tax officials' ability through continental contacts, developing a platform, and establishing a continental cooperation framework.

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Correction: October 23, 2023, — An earlier version of this story misstated how the Kenya Revenue Authority (KRA) planned to tax the informal sector more. According to the KRA, the agency plans to work with the National Treasury to establish policies that will simplify, harmonise and reduce the multiplicity of taxes obligated to the informal sector.

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