This archive report was first published on 17 September 2019.
Kenya Revenue Authority (KRA) has intensified its crackdown on tax cheats, with a new strategy to auction off properties of individuals and companies that have failed to pay their tax dues.
According to KRA deputy commissioner for domestic taxes, Edward Mbugua, the taxman has hired a team of auctioneers to help track properties and recover tax arrears that have not been paid.
Speaking before the National Assembly's Public Accounts Committee (PAC), Mr. Mbugua said that the property auctions will help clear mounting tax arrears, which stood at Sh192 billion in June 2017.
He noted that the taxman has set its sights on prosecuting up to 600 tax cheats by June next year, in an ambitious crackdown targeting to draw in Sh15 billion in revenue.
Some 50 police officers from the Directorate of Criminal Investigations (DCI) have been seconded to the KRA to up investigations into tax defaults.
Revenue collections will be limited to plea-bargain, where an accused agrees to plead guilty in return for some concessions in courts.
Mr. Mbugua also revealed that nearly half of the Sh192 billion tax arrears are penalties and interest accumulated over the years, with Sh90 billion of the total tax arrears remaining uncollected in pay-as-you-earn.
He added that Sh4 billion of the tax arrears date back to 1992 and prior years, with some of these tax arrears being more than 20 years old and continuing to accumulate interest.
Appearing before MPs to respond to audit queries, Treasury PS Julius Muia told the committee that the uncollected taxes had increased from Sh98 billion in 2013/14 financial year to Sh192 billion in the 2016/17 financial year.
He noted that the arrears have doubled and this is something that is worrying us, adding that part of the tax arrears automatically increases if not paid, and the arrears attract a two per cent penalty every month that is not paid.
