KRA Sets Sights On Informal Sector To Expand Its Tax Base

The Kenya Revenue Authority (KRA) has pledged to address challenges faced by informal sector in a bid to encourage them to pay taxes.

Speaking during the 2023 Annual Tax Summit, KRA Commissioner General Mr Humphrey Wattanga said the sector estimated to employ about 15 million people and accounts for 83% of the country’s labour force, has a great tax potential and should be facilitated to uphold compliance.

“One of the initiatives under KRA’s tax base expansion programme is netting the informal sector into the tax bracket, the majority of whom are the MSMEs. This, therefore, informs the need to design strategies and policy interventions to enable KRA tap this sector into the tax bracket,” said Mr Wattanga.

KRA says it will work with National Treasury to establish policies that will simplify, harmonise and reduce the multiplicity of taxes obligated to the informal sector. Mr Wattanga said KRA will educate traders to appreciate the need for paying taxes.

Commenting during the 2023 Annual Tax Summit, tax experts and technocrats reiterated the need to develop policies that will create a certain and predictable tax system. This, they said, will improve tax morale and subsequently inspire fairness, transparency and accountability.

It will also enable simplicity and ease of tax compliance among taxpayers. The experts noted that good policies will enable the tax system absorb economic shocks, broaden the tax base and enhance tax compliance.

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Addressing participants during the event, Principal Secretary for Economic Planning, Mr James Muhati, said resilient tax systems have the ability to ensure that revenues recover in the face of external economic shocks. He said such systems can adjust to changing tax practices and circumstances, both locally and internationally.

The PS noted that a good system can only be established through review of policies. He added that such systems can seal revenue gaps and contribute towards realisation of a robust domestic resource mobilisation agenda.

“Enhancement of tax policies enables the government to grow tax revenue, provide legal framework for introducing tax incentives, provide guidance, ensure certainty and establish coherence,” said the PS.

“Participants have recommended regular reviewing and revision of tax laws to promote predictability and accountability of the tax system. KRA will continue working with the National Treasury to develop policies aimed at creating a conducive environment for businesses to grow,” said Mr Wattanga.

Improve tax systems

The Summit, held annually in October, provides a platform for tax experts, policymakers, public servants, technocrats, civil societies, private sector actors and academia, among other stakeholders, to engage on pertinent issues that touch on tax systems. The participants are drawn from the country and internationally.

The Summit aims to improve tax systems in Africa and beyond by sharing ideas and innovations, enhancing capacity of tax officials through continental interactions, creating a platform and establishing a continental cooperative framework.

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