This archive report was first published on 25 June 2021.
Kenya Revenue Authority (KRA) has unveiled an ambitious tax plan aimed at raising Sh6.8 trillion in the next three years. The plan targets the informal sector, which employs over 80% of Kenya's workers, but has contributed minimally to the country's tax pot.
According to the KRA's eighth corporate plan, the taxman intends to increase the number of taxpayers from the current 6.1 million to 8.1 million by June 2024. This will involve an in-depth analysis of the informal sector to gain a deeper understanding and revenue potential.
Speaking during the launch of the corporate plan, National Treasury Cabinet Secretary Ukur Yatani noted the potential of the informal sector, but emphasized the need for facilitation. 'To expand the tax base, KRA is expected to do an in-depth analysis on the informal sector to gain a deeper understanding and revenue potential of this sector,' he said.
As part of the plan, KRA will set up tax booths in areas where informal enterprises are concentrated, such as Gikomba. This is aimed at building trust between informal sector traders and KRA. The taxman will also employ technology, including machine learning, artificial intelligence, and blockchain, to simplify tax compliance and curb corruption among staff and tax evasion.
The performance of turnover tax, levied at one per cent, has been underwhelming, with the taxman needing Sh117.6 billion to implement the three-year strategy.
Counties will also play a critical role in trying to crack the informal sector, with KRA already working with Nairobi and planning to work with others.
