KRA cracks down on small businesses in push to increase revenue collection
KRA has noted that while some small businesses have registered for PINs, many do not fulfil their tax obligations, with some filing nil returns despite being operational.
The Kenya Revenue Authority (KRA) has intensified efforts to bring small businesses into the tax net as part of its strategy to increase revenue collection.
The taxman is now focusing on enterprises and individuals with a turnover of Sh200 million and below, aiming to boost compliance within the informal sector.
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According to George Obell, the acting commissioner of KRA’s newly established Department of Micro & Small Taxpayers, the sector comprises a large number of businesses, yet its contribution to tax revenue remains minimal.
“What we miss on the large and medium side is the numbers are on this other side; for example, we have about 20 million PIN holders and most of them are the small and micro taxpayers. These are the ones we want to focus on,” he said.
“And if you look at the entire bucket of domestic taxes, medium, large and government agencies give us about 86 per cent and all these. Other numbers give us only 14 per cent, and you see the opportunity there to be able to grow the basket,” Obell added.
To achieve this, KRA plans to implement various strategies to monitor transactions and curb the underreporting of income.
Nil returns
The authority has noted that while some small businesses have registered for Personal Identification Numbers (PINs), many do not fulfil their tax obligations, with some filing nil returns despite being operational.
“That’s where we got a gap, and to address this, we are looking at the data that is available. You’ve got information when you're doing transactions at every level. That information or that transaction will be picked out,” Obell explained.
KRA will be paying close attention to government suppliers, transport operators, ICT service providers and those in the agriculture sector.
The taxman also plans to encourage consumers to request valid fiscal invoices, which will help track transactions and enhance compliance.
“We have got to reach them where they are and you’ve got to find ways and means to be able to have critical point that you can then be able to reach them because you find them in several ecosystems,” Obell said.
In addition to enforcement, KRA aims to address the challenges small businesses face in complying with tax regulations.
Through its newly formed department, the authority hopes to make compliance more manageable and encourage more participation from the informal sector
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