This archive report was first published on 17 September 2019.
Published on September 17, 2019, by David Yego, Commissioner of Investigations and Enforcement, Kenya Revenue Authority (KRA).
Kenya's economic stability relies heavily on an effective tax remittance framework, free from revenue leakages. Tax revenues drive the country's economic prosperity, making it essential for all taxpayers to contribute their fair share.
Taxes enable the government to provide public goods and services, such as infrastructure, education, security, health, and sanitation. To achieve this, taxpayers must register with the Kenya Revenue Authority (KRA), file tax information on time, report accurate data, and pay tax obligations promptly.
When tax laws are wilfully violated, the KRA takes enforcement action, including prosecution. Despite Kenya's economic potential, revenue collection has been hindered by tax evasion, resulting in revenue shortfalls.
Research indicates that tax evasion costs the country billions of dollars annually, forcing governments to borrow, which undermines national sovereignty. A 2015 report by the Tax Justice Network-Africa estimated that Kenya loses over Sh600 billion to tax evasion every year.
While the current figure may be higher, the war against tax evasion is crucial for promoting fairness in taxation. It is unfair for a few taxpayers to support national development while others evade their tax obligations.
Developing countries, including Kenya, face a significant challenge in generating revenues due to tax evasion. The KRA's efforts to combat tax evasion have yielded results, with Sh8.53 billion collected in the 2018/2019 financial year after taking 222 individuals to court.
However, tax evasion is not the only factor contributing to revenue shortfalls. Tax avoidance, corporate losses, and tax disputes also play a role. Tax evasion is a criminal offence, and taxpayers with disputes can use alternative dispute resolution frameworks.
It is essential for all citizens to join the government's efforts to combat tax evasion for the benefit of current and future generations.
