KRA squeezes Sh5.6 billion from 300 wealthy Kenyans: The Standard

The Kenya Revenue Authority (KRA) raised an additional Sh5.6 billion in taxes from just 323 ultra-rich Kenyans last year.In a report released this week, the taxman said its measures to get more people to pay their taxes raised an extra Sh52.1 billion. Of this amount, slightly more than 10 per cent was recovered from high net worth individuals who are now complying with tax laws.

Broken down further, this translates to each of the 323 super rich Kenyans paying an average of Sh17.3 million, an amount much higher than what many small businesses report in sales in an entire year.

On the flip side, KRA’s measures to recruit new taxpayers from the general public netted it Sh3.3 billion. This translates to each of these taxpayers paying out an average of Sh1,650.

The report, which covered the 12 months to June 2019, is telling of the billions of shillings Kenya’s wealthy individuals earn in the course of 12 months.

Enforcement measures

“Enforcement work undertaken in the 2018-19 financial year by the Domestic Taxes department generated Sh52.13 billion,” said KRA.

“The bulk of revenue realised (76.7 per cent) was from debt enforcement measures that targeted to reduce the debt portfolio. The other two critical measures that generated about 23 per cent of revenue realised were taxpayer recruitment and the high net worth individuals’ programme.”

Other enforcement activities that yielded substantial revenue for KRA included debt recovery (Sh40.36 billion), the 36,818 new landlords brought into the tax bracket (Sh881 million) and the conversion of intelligence reports (Sh1.9 billion).

KRA has in recent months been focusing on high net worth individuals and business owners who have evaded paying taxes.

Last year, the tax collector told Parliament’s Public Accounts Committee (PAC) that it had identified a number of rich Kenyans who owed it more than Sh250 billion in unpaid taxes.

President Uhuru Kenyatta, in late 2018, told KRA to do more to get more money from the super-rich Kenyans who have been remitting peanuts, saying some of these individuals need to be investigated as their lifestyles do not match the taxes they pay.

He asked KRA to leverage on technology to increase compliance among the wealthy.

In addition to going after the very rich tax dodgers, KRA has also been evaluating mechanisms to go after accountants and other professionals who assist high net worth individuals and corporates evade taxes.

Missed targets

In the year to June last year, the taxman collected Sh1.58 trillion. However, this then dropped in the last financial year to Sh1.43 trillion, with the agency missing its collection target of Sh1.8 trillion.

KRA had to grapple with the effects of Covid-19 in the fourth quarter of the year, and faces tougher times ahead as the pandemic ravages businesses.

To plug the shortfall in tax revenue in the year to June 2020, the government borrowed Sh786.8 billion, pushing the country further into debt.

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