KRA places 60 top staff on contract

PHOTO | FILE Kenya Revenue Authority Commissioner General John Njiraini at a past function. KRA has placed 60 of its senior managers on a three-year contract from January 1, 2014.   NATION MEDIA GROUP

In Summary

• Taxman surpassed its revenue collection target by Sh600m recording Sh470.8bn
• The top officials’ permanent and pensionable terms were terminated on December 31, 2013 and replaced with the new contracts, which will be renewable every three years, subject to performance, until one reaches the age of 60.
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Kenya Revenue Authority has placed 60 of its senior managers on a three-year contract from January 1.

The top officials’ permanent and pensionable terms were terminated on December 31, 2013 and replaced with the new contracts, which will be renewable every three years, subject to performance, until one reaches the age of 60.

The managers were paid for their years of service and their salaries increased.

“The action is in line with policy to entrench performance-based management at all executive levels,” KRA commissioner-general John Njiraini said, adding, another set of 190, to bring the total to 250 managers, is expected to come on board by year-end.

The announcement was made as the government taxman released KRA’s first half performance results indicating it had surpassed its revenue collection target by Sh600 million recording Sh470.8 billion.

EXHAUST VAT CREDITS

The amount also represents a 23 per cent increase compared to Sh380.7 billion collected in the same period in 2012.

The commissioner-general said the revenue collection is expected to pick-up in the second half of the year with more domestic taxpayers starting to pay up after they exhaust their VAT credits (tax refunds). He said the refunds have now stabilised at Sh29 billion unlike before when the amount was growing.

“We expect to have a big impact on VAT (collections) as the domestic taxpayers start paying up. Most of the companies that had VAT credits will have exhausted them and reverted to paying,” he said.

He, however, said investigations had indicated possible under-valuation of previously zero-rated imports, especially computers and mobile phones, adding that the motive could be to maintain the market prices.

The tax collector is also hoping to reap from investment in electronic payment systems, with large and medium tax payers expected to start remitting their taxes through these platforms by June.

The customs services contributed Sh168.5 billion, which is Sh37.6 billion more compared to same period last year. Domestic taxes were Sh300.5 billion, or Sh52 billion more compared to the same period last year.

The counties had increased income tax remittances from an average of Sh50 million monthly to Sh200 million, compared to former municipal and county councils.

Road transport collected Sh1.85 billion or 21 per cent in the same period in 2012.

Mr Njiraini said strong VAT growth, tighter enforcement of valuation procedures in customs focusing on risk-prone cargo, enhanced corporate tax remittances and enforced compliance of VAT Act 2013 had boosted the revenue collection in the period under review.

The tax collector, however, recorded Sh3 billion lower than the target for the second quarter as the reforms, particularly in VAT Act 2013, kicked in.

TIGHTENING THE NOOSE

He said the tax collector targeted Sh70.2 billion in January and Sh208 billion in the third quarter, which required a growth of 16.8 per cent and 23.1 per cent over that collected in same periods in 2012.

This growth, he said will be achieved through deepening of the VAT Act 2013 as companies start implementing the required provisions, tightening the noose on defaulters of previously zero-rated goods and increased market surveillance to curb evasion for consumption based taxes.