Taxman to Track Via E-System in Kenya
ELECTRONIC tax registers will soon be connected to a central server at Kenya Revenue Authority headquarters to help in real time monitoring of transactions for fraud detection.
KRA commissioner general John Njiraini said on Friday that the authority is in the process of setting up a system that will remotely transmit ETR data to a central device, a move which will also reduce the need for a large workforce normally used to conduct inspections at various businesses. "The main problem in management of ETR is monitoring who is using it and when or which machine is connected and which is disconnected," explained Njiraini.
There have been cases where some retailers opt not to use the registers sometimes; only connecting the machines when an inspection by the authorities is imminent. "The usage of ETR machines has not been as good as we would want," added Njiraini. KRA in 2006, directed that all those supplying taxable goods or services should install ETR machines at their business premises to record sales and store tax information at the time of sale.
The move was made to improve collection of value added tax under the domestic taxes department. When the issue was first introduced in the 2004 budget speech, KRA clashed with traders on the mandatory requirement to install ETRs with the business community engaging it in a series of legal battles and demonstrations opposing the use of the machines.
KRA which is faced with the task of collecting higher revenues for the devolved government system, plans to launch its new corporate plan on Friday which will among other things establish the tax gap in the country. Tax gap is the difference between taxes owed and taxes paid. With a central monitoring system, Njiraini said, traders whose ETR machines show abnormal shift in transactions or long periods of non usage will have to explain their activities and may be liable for penalties.
The use of ETR among other measures have strengthened the domestic tax revenues which are always the highest compared to other tax departments every year. Data released by the tax authority on Friday for the last financial year 2011/2012 show that domestic taxes collected stood at Sh464.9 billion accounting for over 50 per cent of all the taxes collected over the period which was a total of Sh707.4 billion. Indirect domestic taxes which include VAT however dropped by 3.7 per cent over the previous year's collection to stand at Sh130.8 billion.