Despite declaring a Sh18 billion deficit in revenue collections, Kenya Revenue Authority has assured a Parliamentary committee that it will meet the full-year tax collection target.
The taxman collected Sh249 billion against a Sh267 billion target representing a 93.3% performance rate in the first quarter.
KRA’s Commissioner General John Njiraini who accompanied National Treasury Cabinet Secretary Henry Rotich, told the Parliamentary Committee on Finance, Planning and Trade that a raft of measures were in place to boost collection in the second quarter.
To sustain growth, Mr Rotich said KRA will tighten the customs valuation process through stricter declarations vetting. The taxman would also enhance its staffing capacity at all release points, he said. The tax collector will also leverage on the new Withholding Tax provisions as well as engage in data mining on the new IFMIS system recently deployed across the public sector. Such exercise, Mr Rotich said will help KRA seal existing tax loopholes between Counties and the central government by focusing on income and VAT declarations.
The Cabinet Secretary further told the committee that KRA was also seeking additional funding to finance its initiatives geared at enhancing tax compliance. If successful, such funding could be pegged at two per cent of the total revenue collected. The Authority, he added will also ask for a fast resolution of pending tax disputes at the Tax Appeals Tribunal which could see it unlock more than Sh25 billion in disputed assessments.
As part of KRA’s efforts to unlock another Sh33 billion held up in judicial court process, the authority has petitioned the Judicial Service Commission for the establishment of a High Court Tax Division. The tax collection deficit was attributed to a sharp increase in the proportion of non-dutiable imports which stood at 41.6%, largely due to Kenya Airways’ fleet expansion programme and the closely linked removal of VAT on aircraft and aircraft spares that was removed through the Finance Act, 2014.
“As a result of the lower than expected growth in the first quarter, the growth required to meet the balance of FY 2014/15 target (October 2014-June 2015) is 18.6% which compares with average of 15.3% recorded for the same period over the last decade,” Mr Rotich said. He added; “Stronger growth will be required for reminder of the year.”
KRA is under pressure to raise Sh1 trillion to finance government spending that includes among others debts owed to suppliers and other parties. Already, the National Treasury has committed itself to enforce clearance of project costs such as infrastructure bills owed to various contractors.