While KRA Works On Raising More Revenue, Presumptive Tax Performance is Below Par

The Kenya Revenue Authority (KRA), the body mandated by law to collect taxes has been unable to hit a Sh. 2 billion presumptive tax target. The taxman was only able to collect Sh. 35 million in a year which is a drop in the ocean when compared to the Sh.2 billion it had been poised to collect according to its projection. According to Business Daily Africa, KRA blamed the counties for the lack of support in its bid to collect the tax. The presumptive tax came into force after the Finance 2018 Bill introduced the provision which is aimed at helping the government to meet its rising budget deficit. The presumptive tax is charged at the rate of 15 % on the trading license fees and single business permits. The county governments are the ones who are tasked with collecting the money and remitting it to the KRA.

The KRA through its deputy commissioner for corporate affairs Maurice Oray told the National Assembly that there has been a lack of adequate buy-in by the counties which is key for the tax to be implemented. Another reason for the poor performance of the tax according to Mr. Oray was the absence of an integrated revenue collection system linking the taxman and the county governments. The taxman also heaped blame on the fact that the presumptive tax charge does not go hand in hand with the income earned. The KRA has also blamed the dismal collection from small traders on the “static nature” of the license and permit fees which means that the tax charged is not commensurate to the income earned.

That there is no such integrated system has caught the eyes of the President. President Uhuru Kenyatta took on the matter and gave an order for the concerned bodies to come up with a solution. The concerned bodies include the KRA, the Commission for Revenue Allocation (CRA), the Council of Governors (CoG) and the National Treasury. At the moment there are at least 11 different revenue collection systems which are in place across the counties and the national government. The President has in the previous regime served as the Treasury boss and may be familiar with the revenue collection efforts.

The different revenue systems have seen the national and county governments being unable to co-ordinate their revenue collection efforts. The duplication of efforts has seen losses in potential revenue. It is expected that the integrated revenue collection system will be able to fix this overlapping of efforts. The system once it is up and running is expected to be used by both the national and county governments. The Times Tower based taxman which has been under pressure to raise money to fix the increasing budget has often come up short in revenue collection for the past three years. This has forced the new sheriff in Times Tower Mr. Githii Mburu to resolve to new measures to redeem the taxpayer. The KRA has in the past arraigned leading businessmen on charged of tax evasion in a bid to bring on more taxpayers on board.

Source : http://mpesapay.com/while-kra-works-on-raising-more-revenue-presumptive-tax-performance-is-below-par/

Not well versed with tax issues but I thought Rotich in this years budget reintroduced turn over tax due to failed presumptive tax implementation.

Presumptive tax was not dropped… they just re-introduced the TOT…