Money Markets
Kenya Revenue Authority commissioner-general John Njiraini speaks during
the media briefing on the iTax campaign at the Hotel Intercontinental,
Nairobi, April 29, 2015. PHOTO | DIANA NGILA
By GEOFFREY IRUNGU, girungu@ke.nationmedia.com
In Summary
- The tax evaders were detected following the recent introduction of withholding valued added tax (VAT) for suppliers to the national government.
- The intention of the tax was to capture details of suppliers who were benefiting from public spending while avoiding their tax obligations.
The Kenya Revenue Authority (KRA) has identified over
1,000 cases of tax evasion among government suppliers as the authority
links up with the devolved entities in a drive meant to increase
compliance.
The tax evaders, mostly small and medium-sized enterprises
(SMEs), were detected following the recent introduction of withholding
valued added tax (VAT) for suppliers to the national government.
The intention of the tax was to capture details of
suppliers who were benefiting from public spending while avoiding their
tax obligations.
Once a supplier delivered goods or services,
withholding VAT of six per cent would be charged and remitted to KRA
with details of the supplier.
This way, KRA is able to establish who the
suppliers are and then go on to find out whether they had been paying
taxes and filing returns.
“We have identified over 1,000 cases of this
(suppliers not paying up) nature whose details are being followed
through tax recovery,” said KRA commissioner-general John Njiraini on
Wednesday.
He was addressing the Press on Wednesday at the
Intercontinental Hotel in Nairobi where he launched a campaign to
encourage filing of tax returns through the iTax platform which enables
KRA to capture data more accurately and also ensures quicker filing of
returns.
Mr Njiraini said claims for value added tax refunds
by such suppliers would in future not be honoured if their details will
not be validated through iTax.
“The implication is that non-compliant suppliers
may in the not too distant future lose the opportunity to do business
with their compliant counterparts who make correct declarations,” said
Mr Njiraini.
He said KRA was in the process of strengthening its
capacity to nab goods and services suppliers to county governments who
do not pay tax.
KRA will obtain details of such tax evaders from
entities with which they do business, which will reveal the amount of
revenues they make annually, he said.
There are many SMEs which operate by supplying to
other businesses, mainly large and compliant ones which normally retain
their transaction details. The information can then help determine
whether the SMEs have paid their taxes or not.
Mr Njiraini said that the approach is not meant to
impose penalties on, or punish, some firms but to help taxpayers comply
with the law.
He said that use of the iTax technology, which is
able to match data from various taxpayers, will make the pursuit of
noncompliant taxpayers easier.
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