Kenya taxman Sh10b short

July 20, 2010
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, NAIROBI, Kenya, Jul 20 – The Kenya Revenue Authority (KRA) has collected Sh534.4 billion in the 2009/2010 fiscal year but was yet again unable to meet its target by close to Sh10 billion.

During the financial year, the taxman had set out a Sh545 billion target but fell short owing to a myriad of challenges that slowed its ability to hit its intended mark.

Releasing the institution\’s performance, KRA Commissioner General Michael Waweru attributed the shortfall to underperformance of key economic sectors such as agriculture and manufacturing that affected profitability during the year.

"The main reason is the global financial crisis in 2009 and of course we are not immune to it. The thing to point out is that it is low revenue rather than a decline in growth," Mr Waweru said.

Mr Waweru also pointed out a number of tax policies introduced during the financial year were yet to have the desired effect on the ground.

"Revenue performance to some extent affected by some tax policy measures where the impact on the ground exceeded what was forecast," he said.

The Commissioner General did not however highlight which policies they were, only saying that KRA had a challenge with Value Added Tax (VAT).

Despite falling short of its target, KRA was able to post an 11 percent growth over the previous year.

In 2008/2009 KRA collected Sh480.6 billion against a target of Sh492.9 billion which was mainly attributed to by tax evasion by unscrupulous traders.

In 2009/2010, the customs services department collected Sh193.7 billion recording an eight percent growth rate over the previous year where it did Sh179.3 billion. Domestic taxes accounted for Sh338 billion up 13.2 percent from Sh298 billion. The road transport department was able to collect Sh2.5 billion.

A major challenge for KRA has been corrupt employees but has since cracked down on them with some even being prosecuted.  KRA has also suspended clearing agents with outstanding entries in an effort of cutting down false claims.

The Kenya Revenue Authority has also vowed to crack the whip on defaulting taxpayers following revelations it was losing billions of shillings in unpaid levies.

In the 2010/2011, financial budget read by Finance Minister Uhuru Kenyatta in June, The Treasury plans to deal with the controversial issue of VAT refunds, which has been a thorny issue with most businesses.

Mr Kenyatta said a Tax Reform Commission would be formed to among other things come up with a simplified tax code that includes VAT legislation that will address most of the challenges faced by the private sector.

The Finance Minister further pledged to have all pending and genuine VAT refunds as at the end of June paid by the end of this month.

Mr Waweru however appealed to the business community to make the work easier for KRA by attaching all the necessary documentation to hasten the clearing process.

"We are planning to process non risky claims with 120 days. The risky ones I think we have to take enough time for us to satisfy ourselves the claims are payable," he said.

KRA has so far refunded Sh14 billion in the 2009/20101 financial year and is looking to refund Sh5 billion by the end of the July.

The Authority has set out a Sh641.2 billion target for the current finical year.

 
 

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