KRA to miss tax collection target due to inefficiency, Cytonn report reveals

High targets and an inability by the Kenya Revenue Authority (KRA) to effectively tax the informal sector have stopped the authority from meeting its targets despite improvements in tax efficiency, a new report from Cytonn Investment has revealed.

According to the analysis, the KRA will still miss tax collection targets in the 2016/17 fiscal year should the government fail to address corruption and mismanagement of public funds as well as efficient allocation of budgetary resources for Kenya to realize double digit growth as outlined in the Vision 2030 protocols.

“Historically, KRA has missed their tax collection targets and despite the improvements in tax efficiency, we think that KRA will still miss tax collection targets in the 2016/17 fiscal year, due to the high target they have, and the inability to effectively tax the informal sector in Kenya,” reads part of the report.

“However, with the improvement in economic growth this shall translate to better earnings for companies and improve the employment status of the country and this would translate to better collections,” the report states.

Less than 2 million Kenyans met the deadline for filing their returns on the KRA’s online ‘iTax’ platform by June 30, 2016, forcing the authority to extend its deadline for filing returns.

However, the authority — while commending taxpayers for turning up in large numbers to meet their tax obligations — had warned that those filing their returns late will have to pay penalties.

“Consequently, KRA informs taxpayers that according to the Tax Procedure Act 2015, Section 83, late filing of returns attract penalties as follows: For employment returns, the highest of 25 per cent of tax due or Sh10,000. For turnover tax return, the penalty is Sh5, 000,” stated the report

“For failure to submit a document other than a tax return attracts Sh1,000 for each day or part day of default but the total shall not exceed Sh50, 000,” the Authority observed.

KRA advised taxpayers to seek assistance and know the specific penalty that applies to them, adding that iTax Support Centres will continue to operate under normal working hours to assist those filing their returns late.

It said the large numbers of those filing returns on iTax is a show of patriotism that should be embraced in the new financial year.

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