NAIROBI, Kenya, Jan 7- Despite the harsh operating environment characterised by declining economic growth, the Kenya Revenue Authority (KRA) has announced that it surpassed its collection targets for the second quarter of the 2009/2010 financial year by Sh2.5 billion.
KRA Commissioner General Michael Waweru told at a press briefing on Thursday that during the October to December 2009 period, they managed to collect Sh136.8 billion against a target of Sh134.3 billion.
“Domestic taxes department which accounted for 61.6 percent of the total collections collected Sh84.51 billion while the Customs department collected Sh51.65billion,” he said.
The two departments exceeded the set revenue targets by Sh1.8 billion and Sh1.1billion respectively. The Road Transport Department however fell short of its target by Sh400 million during the quarter, he added.
“The target for the road department was wrong. The minister (of Finance) has over the years withdrawn a number of licenses but the people who set the targets have not been factoring in some of these effects,” he said adding: “this is not a target that they are likely to meet,” he said in reference to the Roads Transport Department which managed Sh636 million.
The second quarter figure also represents a 12.3 percent increase over the Sh121.8 billion collected during the corresponding period in the 2008/2009 fiscal year.
Although inflation eased and the interest rates were stabilised during the second quarter, Mr Waweru attributed their improved performance to the administrative measures they have put in place to increase the revenue collections.
“We’ll take credit for that,” he said of the initiatives that include decentralisation of its services, monitoring of tax compliance and implementation of the integrated tax management systems that encourage tax payers to use the electronic filing facility.
Despite this success, the Authority was also faced with challenges many of which stem from the evasion of tax payment. Some unscrupulous clearing agents, he explained have been forging documents and misleading people by claiming that they have paid duties to the KRA on behalf of importers.
“Such people then present the (fake) documents to the Authority’s officials to have the cargo cleared. They’ll then go to the importer and tell them ‘we have paid Sh20million for you so can we refund us,’ he said.
He said there were following several such cases but called upon importers to pay the taxes directly to KRA to avoid being conned off their money. Over 120 agents that do not conform to the requirements of the Authority’s and the East African Community Customs Management Act have been suspended, the official said.
Despite the challenges, the Commissioner General expressed confidence that with the evident economic recovery coupled with the various measures that they have put in place, they would realise their target of Sh545.2 billion for this financial year.
The Authority missed its Sh493 billion 2008/2009 target by Sh12 billion as the country grappled with the shocks of the global financial crisis, adverse weather patterns and the effects of the post election violence.
At the same time, the Commissioner said they had been able to audit about 90 percent of the Value Added Tax (VAT) refund cases that they had received. He pledged to have the exercise completed by the end of this month but added that they would seek additional funds from Treasury to deal with the refunds’ back log.
The private sector particularly manufacturers have been calling for the implementation of a different system to handle Value Added Tax refunds where business people can off-set their refunds against their other taxes.
The tax collector has also rolled out a revised risk profiling framework for VAT refunds which is able to pick tax compliance risk factors that were previously not profiled.