Corruption rife at KRA says taxman

November 28, 2009
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, NAIROBI, Kenya, Nov 28 – The Kenya Revenue Authority which is charged with managing the country’s revenue has admitted that fraud and corruption is rampant at the institution.

KRA Commissioner General Michael Waweru on Saturday said the tax collecting institution faced tremendous challenges in maintaining integrity.

“We do appreciate that tax collection is not an easy task and we are faced by obstacles some of which touch on the issues of integrity. KRA recognizes that for an organization of its size there are bound to be elements whose intentions may be contrary to the goals of the organization. You know that we have never shied away from admitting that we have a problem,” he said.

Mr Waweru blamed the business community for the wanton corruption that involved members of the tax collecting unit saying the blame lay squarely on it and a society that condoned impunity.

“We have sacked people at KRA, we have changed management but the vice is still with us. Therefore what is it that is the problem? It is those business people and they need to begin changing. These people will foster corruption as long as they are not arrested. Therefore we all need to work together to eradicate this costly vice,” he said.

He also observed that the introduction of the electronic system to transact tax businesses would reduce issues of corruption.

“What we are saying is that our people will collude less with the tax payers if they are not talking to them face to face. Our emphasis has been to make tax payers deal with us from distance. If they come to our offices it will be easier for them to bribe our officers into conducting favours for them,” he explained.

Mr Waweru however stated that the tax payer did not lose any money through tax evading individuals promising that the institution had mechanisms that ensured that KRA gets its funds.

“Every measure and investigation that we carry out is done to completion and we always make sure that no tax is lost as a result of mis-declaration or under declaration. I therefore do not want to speculate on how much money the tax payer loses because of tax evaders. We always get taxes from those people who try to cheat KRA off tax payers’ revenue,” he stated.

He also explained that Kenya was the second best country in Africa after South Africa in matters of tax collection.

“The highest tax rate in this country is 30 percent and we collect 22 percent of GDP (Gross Domestic Product) in taxes. This means that the tax gap is eight percent and that if you did a realistic analysis of the potential for taxation for the country maybe we would be doing 25 percent which means we can improve by another three percent. In Africa we are doing great,” he explained.

The Commissioner General was of the view that the devolution of taxes as proposed by the draft constitution would be expensive to the tax payer.

“We hope that when we critically look at the draft we will be able to make proposals that will improve the draft so that collection of taxes will be possible through out the country at the national and devolved levels. However I have a sneaky feeling that the proposed draft will be expensive for the tax payer,” he noted and added that the institution would also have to look at other financial clauses within the draft.

The commissioner further promised that KRA was set to complete its auditing process which would enable the tax collecting unit to file its tax refunds by the end of its first quarter next year.

He explained that the only way KRA would get funding from Treasury to help it file its refunds was by completing the auditing process.

“The Finance Minister gave us up to the end of next year to finish the audit of the VAT refunds and come up with the final figure so that he would look for money to allocate to us. However we need to give him the exact final figure verified because there are some claims which cannot be paid because they are not genuine,” he said and promised to complete the auditing process by December.

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