KRA in move to seal loop holes, increase tax base

The Kenya Revenue Authority (KRA) has said it will review tax incentives before the 2016/17 fiscal year as the commission seeks to seal all loop holes thus increasing its tax base.

The commission says the move was reached due to the fact that current tax incentives have not met their goals resulting in huge losses in revenue collection.

“The tax exemptions on the Export Processing Zones have not translated to anything meaningful. We have seen firms who have been given these incentives for a certain period transform their business into other institutions to avoid paying taxes,” KRA Deputy Commissioner Strategy Innovation and Risk Management, Maurice Ojee said.

He added that the Authority is working on a new structure that could see existing tax bands widened to reflect current income trends and cost of living levels.

“We also need to harmonise our incentives with the East African Community states. We are asking ourselves: ‘How have these incentives impacted on our economic growth? How have they impacted our revenue?’” he stated.

To further broaden tax collection, Ojee said the Authority has started tracking landlords who have been evading tax in a bid to force them to declare their rental income.

Key measures theat the Authority has taken include reviewing tax exemptions on persons with disabilities as well as churches and trusts.

“We have seen churches venturing into commercial activities, they need to be on the tax bracket,” he added.

He however called for the central government to support the commission through funding to enable it effect its mandate and services.

“We are given only 2 per cent of the total revenue we collect. That is not enough. The central government should increase this allocation to ensure we carry out our services with ease,” said Ojee.

He projected that the country expects to collect more revenue in this financial year with a target of Sh1.49 trillion to finance the Sh2.3 trillion budget.

KRA collected Sh842.5 billion against a target of Sh911.5 billion with the Authority’s Commissioner General John Njiraini attributing it to slow growth in customs taxes, especially during the first six months of the financial year ending December 2015.

The collection was however, seen a revenue growth of 11.7 per cent compared to the previous year.

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