SMART MONEY

Safaricom blocks KRA from accessing M-Pesa accounts

BUSINESS TODAYJun 16, 20161.7k

KRA is seeking to gain unrestricted access to taxpayers’ bank and mobile money accounts as part of the efforts to catch tax cheats.

Safaricom has rejected the taxman’s quest to gain unfettered access to its customers’ mobile money records, throwing a big hurdle at the Treasury-backed plan meant to smoke out tax cheats.

Safaricom said it will not give the Kenya Revenue Authority (KRA) customer data unless laws touching on confidentiality are changed to allow the mining of such information.

The KRA is seeking to gain unrestricted access to taxpayers’ bank and mobile money accounts as part of the efforts to catch tax cheats and improve revenue collection as its targets continue to rise.

“As you are aware, the Constitution of Kenya restricts access to confidential customer information,” Stephen Chege, Safaricom corporate affairs director, told the Business Daily in an email response. “Other laws such as the National Payment Systems Act and the regulations thereunder — which govern M-Pesa — also restrict access to such information unless by a court order.”

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Treasury secretary Henry Rotich has, through the Finance Bill 2016, amended a section of the Tax Procedures Act (TPA), laying the ground for KRA’s wish to be granted. The taxman needed the law change to spare it the burden of having to seek court orders every time it wants to access an individual’s account but tax experts and lawyers have warned of fierce legal opposition to the invasion of people’s privacy.

The proposed law says “a person shall, upon being required to do so by the commissioner, furnish the commissioner with returns showing such information, in such form and manner and within such time as the commissioner may prescribe”.

Companies and individuals tend to bank money they cannot spend, an indication of the surpluses in a person’s financial or business operations for which they are required to pay tax. Most payments are also made through bank accounts, offering the taxman an opportunity to demand his share.

Currently, the taxman has to seek courts to gain access to an individual’s bank accounts, a long process that the KRA wanted removed to aid tax collection efforts. KRA commissioner-general John Njiraini told the Business Daily in April that he expected some amendments to the law giving him direct access to bank accounts “for information about businesses and individuals on an ongoing basis”.