The Kenya Private Sector Alliance (KEPSA) and the Kenya Revenue Authority (KRA) jointly hosted the 5th KEPSA-KRA Tax Round Table forum at the Nairobi Serena Hotel. The conference brought together business leaders and stakeholders’ drawn from the private sector to deliberate on the prevailing tax policy and related concerns. The 5th KEPSA-KRA Tax Round Table forum also provided a platform for KRA to update KEPSA members on developments relating to tax compliance and policy matters.
Specifically, the roundtable forum explored collaborative approaches on how to:
- Increase revenue collection and expand the tax base without overburdening the current tax payers;
- Enhance regional and cross-border trade competitiveness juxtaposed against emerging opportunities offered by ACFTA and newly negotiated instruments/ agreements within other bilateral and multilateral bodies such as EAC, ECOWAS, COMESA etc.;
- Create changes within the current tax regimes and structures to accommodate and support Small and Micro Enterprises development and growth; and
- Establish partnerships in improving compliance.
Taking note of the statements and presentations made by KEPSA Chairperson Mr Nicholas Nesbitt, KRA representatives led by Commissioner General Mr Githii Mburu, ICPAK representative, CPA Ednah Gitachu and KEPSA Public Finance Sector Board Chair, Dr. Habil Olaka, the 5th KEPSA-KRA Tax Round Table issues this public communique:
- ACKNOWLEDGING that the private sector is desirous to have a tax regime that is coherent with the national productivity agenda as a developing country. The private sector supports efforts to broaden the tax base and the integration of technological applications to facilitate tax compliance including the use of AI and block chain solutions.
- CONDEMNING the ultimate misuse of public money collected as tax obligations from Kenyan taxpayers through corruption.
- CALLING on the Government and the relevant tax policy formulators to rethink our tax regime for Small and Medium Enterprises (SMEs) who are currently constrained and opting to evade tax obligations due to the high cost of compliance.
- URGING the adoption of a win-win approach to tax enforcement based on taxpayers’ collaboration rather than coercion as such a model will promote tax payment and strengthen KRA’s capacity to meet its targets.
- AFFIRMING that the private sector players are committed to paying their fair share of the Ksh. 1.843Trillion tax target this year.
- REGRETTING that there are unscrupulous business persons who have invested heavily to ensure they do not pay a coin by evading tax and yet such businesses would like to compete with those who pay their tax. This is an unfair trade practice which requires decisive action by KRA to guarantee market competitiveness and a level playing field. KRA progressing on with the efforts to engage all the relevant stakeholders and address issues relating to implementation of the Value Added Tax (VAT) AUTO-ASSESSMENT (VAA) solution.
- APPRECIATING that those who evade tax are disadvantaging all of us (in Government and in private sector) as they deny Government revenues and compete unfairly with honest businesses.
- WELCOMING KRA’s recent efforts and measures to curb corruption as private sector players are entitled to zero-corruption service from the Authority. Already, KRA has dismissed over 200 tax officers and arraigned more than 50 employees suspected of abetting tax evasion.
- AFFIRMING KRA’s commitment to create a conducive tax regime for business and stakeholder partnerships to foster tax compliance. Private sector players reiterate commitment to partner with KRA in dealing with illicit trade, play our part in facilitating and improving trade competitiveness. Noted that the development of a National Tax Policy is ongoing. The Policy is expected to address the existing structural, institutional and other inherent problems in the tax system.
- ENCOURAGED by KRA’s commitment to continue engaging the private sector through an open door consultative policy and further create structures to accommodate MSMEs. Already, KRA has established a dedicated help desk for the MSMEs who are already recognized as a tax category. The forum appreciates that KRA-notwithstanding the limited National Treasury funding of Kshs 1.2B monthly against monthly refunds applications of Ksh.2.36B -has made progress on the VAT refunds issue and has already paid out Ksh.14.2B paid in FY 2018/19 and a further Ksh 6.2B was paid between July and October 2019. KRA has also established a Project team to facilitate the clearance of 6,000 VAT refund cases worth Ksh.27.6B outstanding as at 31.10.2019, possibly by April next year. Other positive measures undertaken by KRA to handle private sector concerns include;
- A Green Channel approval framework developed to facilitate expedited payment of low-risk refunds. Already 270 taxpayers have been on-boarded on the Green Channel.
- Tax System enhancement to enable refunds application for credits arising from Withholding VAT in view of changes in law under development (currently under testing).
- System integration (iTax and ICMS) to facilitate faster refund claims processing and timely verification.
- Withholding VAT reduction from 6% to 2% expected to unlock funds held in VAT credits
- Legislative change to allow refund of withheld VAT to improve cash flow.
- COMMITTED to support KRA’s private sector request to:
- Proactive participation in policy formulation
- Sector Associations to assist in information sharing and ensuring that all their members are registered and compliant taxpayers
- Assist KRA in enforcement of various tax laws by reporting cases of fraud and tax evasion proactively.
Githii Mburu Nick Nesbitt
Commissioner General Chairperson