The Kenya Revenue Authority (KRA) is seeking to venture further into the untapped vast tax collection base in the informal sector that would shift and expand revenue collection as revealed by Wattanga during the 2023 Annual Tax Summit in Nairobi.
KRA pledged to address challenges facing the sector in a bid to incentivize and onboard them into the tax net as it informs the need to design strategies and policy interventions to enable KRA to tap this sector into the tax bracket.
KRA Commissioner General Humphrey Wattanga said that the sector, which is estimated to employ about 15 million people, accounting for 83 percent of the country’s total labor force, has great tax potential and should be facilitated to uphold compliance.
“One of the initiatives under KRA’s tax base expansion program is netting the informal sector into the tax bracket, the majority of whom are the MSMEs,” Wattanga said.
The Summit, held annually in the month of October, provides a platform for tax experts, policymakers, public servants, technocrats, civil society, private sector actors, and academia, among other stakeholders, to engage on pertinent issues that touch on tax systems.
KRA announced that it will be working with the National Treasury to establish policies that will simplify, harmonize, and reduce the multiplicity of taxes owed to the informal sector.
The expansion of the tax base comes at a time when KRA is expected to collect Sh2.57 trillion for the financial year 2023–24.
Tax experts and technocrats at the summit 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.
“Enhancement of tax policies enables the Government to grow tax revenue, provide a legal framework for introducing tax incentives, provide guidance, ensure certainty and establish coherence,” Principal Secretary for Economic Planning James Muhati said.