Kenya closes in on the top 50 ranking in the ease of doing business after targeting reforms in ease of paying taxes and trading across border indicators.
Kenya has made great strides in improving efficiency in payment of taxes as well as cross border trade. During a meeting between the Boards of the Kenya Revenue Authority (KRA) and Kenya Private Sector Alliance (KEPSA) held on April 11, 2019 at the KRA offices in Nairobi, KRA reported that several measures had been put in place to propel the country’s ranking to top 50 supported by the indicators.
Key among the initiatives is the proposed unification of KRA, NSSF, and NHIF payments systems. Already, key milestones have been achieved in the unification of NSSF’s online payment system (SSPAS) and KRA’s iTax, with KRA having reported that full rollout of the unification will be achieved by December 2019, reducing the number of payments by 12. Roll out of the proposed Tax Invoice Management System; an enhancement of the current ETR regime, which will enable automatic reporting of tax invoice transactions, is expected to further ease payment of taxes and VAT refund processes. The recently installed integrated cargo management system has also greatly enhanced efficiency in non-intrusive verification and intelligence-based risk profiling to establish which goods to undergo physical verification.
The business community and the revenue authority can achieve mutually beneficial outcomes if both sides worked together as partners for growth of business and the economy. In his opening remarks Amb. Muthaura Chairman of the KRA Board welcomed partnership from the private sector and acknowledged the need to harmonize efforts and open up dialogue channels for the mutual benefit of the Government and the private sector. He accentuated the need for a concerted effort in facilitating a conducive business environment and enhancing revenue collection through voluntary compliance.
KEPSA CEO, Ms. Carole Kariuki acknowledged the achievements the Authority has undertaken and implemented in supporting the private sector specifically, the roll out of the electronic cargo tracking system (RECTS) to track cargo in transit and eliminate diversion and other illicit trade activities, implementation of the Authorized Economic Operator programme to facilitate faster cargo clearance, embedding innovation and technology in tax administration such as iTax, VAT auto assessment (VAA) system and the proposed Tax invoice management system (TIMS).
The Commissioner General Mr. John Njiraini elaborated on the KRA’s deliberate approach in engaging the private sector through the formation of structured engagement platform. KRA hosts a bi-annual roundtable with the private sector, with a view of ensuring continuous dialogue and resolution of challenges facing the business community. He pointed out additional achievements the authority had made including reforms towards increased transparency and professionalism in tax disputes resolution and in customer relationship management; introduction of scanning technology for cargo management and faster clearance; and, installation of rail-based scanner for real-time scanning of goods on transit via the standard gauge railways (SGR), which will be operational from May 2019.
The discussions focused on three areas mainly; improving the competitiveness and friendliness of the business environment, mutual partnerships in driving innovative solutions for tax base expansion, and collaboration in the fight against illicit trade.
Kenya Association of Manufacturers (KAM) Chairman, Mr. Sachen Gupta noted Manufacturers are owed over Ksh 20billion in VAT refunds which if injected back into business could spark an annual growth of KSh 50 billion turnover in the industry and boost revenue collections in VAT, Corporate, and Income Taxes. KRA committed to resolve these challenges and work on a permanent solution to VAT refunds to support the industry.
On its part, KRA commended KEPSA’s proposal to have KRA as the sole tax collector for both national and county governments and would work together to ensure this goal was realised.
KRA and KEPSA committed to work jointly to facilitate the industry in the following ways, among others:
- Streamline cargo clearance processes to enhance efficiency
- Leverage and invest in technology to enhance the ease of doing business.
- Developing innovative ideas for expanding the tax base.
- Clearance of the VAT backlog in which KRA committed to pay Ksh. 2 billion of VAT refunds in the month of April.
- Streamlining the VAT refund process by integrating the ICMS and iTax system and other internal measures.
- Introduce technology to make it easier to file VAT returns to reduce the compliance costs to business.
- Increase efficiency at the port of Mombasa and pursue reduction of the number of agencies businesses have to deal at the Port from 27 to four.
- Partnership with other government agencies for reduction of costs in logistics and excise management.
The meeting lauded the National Integrated Identity Management System (NIIMS), commonly known as Huduma Namba, and concurred that the registration will be a deal breaker in digitizing the economy.
The Boards committed to hold semi-annual engagements to ensure continuous dialogue and exchange of ideas for revenue collection enhancement and improvement of the business environment in Kenya.