The newly formed Kenya Revenue Authority (KRA) Department of Micro and Small Taxpayers has launched a crackdown on small-scale businesses evading taxes in a bid to expand its tax base.
The new department is now targeting businesses and individuals with a turnover of Ksh200 million and below. Led by the acting commissioner of the department, George Obell, KRA revealed that micro and small businesses generate significant revenue but hardly remit it in taxes.
Obell noted that while the sector has a high number of registered taxpayers, its contribution to tax revenue remains minimal.
"If you look at the contribution today, the medium, large, and government entities are only giving us just about 86 per cent; the other 14 per cent is coming from micro and small businesses," Obell said.
The main issue, according to KRA, is that these businesses often under-declare their revenues. Now, KRA has revealed that it is implementing new measures to ensure the revenue is remitted.
KRA notes that although some businesses have registered for their Personal Identification Number (PIN), many have not been fulfilling their tax obligations by filing nil returns.
As part of this transformation, KRA is implementing internal realignments within its functional areas of revenue, technology, and service to create an agile and responsive tax administration framework. The authority aims to strengthen the digital infrastructure for data-driven decision-making and automation while improving taxpayer engagement and support, thereby promoting ease of compliance and service delivery.
Some of the reforms KRA plans to introduce include tracking transactions and focusing on sectors such as transport and ICT while ensuring businesses file their taxes.
According to Obell, KRA will be analyzing data from these businesses, capturing information from transactions at every level and using it for tax purposes.
"Let me give a simple example: if you offer services to an established business and it is a service that attracts withholding tax, we are going to withhold and remit, ask for your PIN, and use that information to remit the tax," Obell explained.
"That three or five per cent withholding tax is not the final tax, so we are already expecting that at the end of the taxing period, you will file and declare your total income," he continued.
The new reforms come at a time when Kenyans are already filing their tax returns, with the deadline set for June 30.
