NAIROBI, Kenya, Feb 14 – The Kenya Revenue Authority (KRA) is to re-organise the unit that deals with large businesses under the Domestic tax department to respond to rising challenges.
The Large Business Taxpayer unit was set up by KRA to liaise with large businesses, multinational companies and high net individuals to assist them in meeting their tax obligations.
KRA Commissioner General Michael Waweru said on Monday, that the unit contributes between 73 and 75 percent of all domestic taxes and there was need for the authority to improve how it handles the companies to increase tax collected from the group.
"These companies are a significant contributor to the economy. They need to be treated slightly different to maximise their output," Mr Waweru said.
KRA says the group of large taxpayers consists of an estimated 1,100 companies and contributes on average 45 percent of total revenues collected annually.
Mr Waweru said the planned tax reforms, which are part of the administration reforms and modernisation programme, seek to close the tax gap and broaden the tax base.
In 2009/2010, Safaricom was the top taxpayer paying Sh25 billion in various forms of taxes.
KRA Domestic Tax (large business unit) Commissioner John Njiriani said such businesses, to some extent, wield political interest and have been at the forefront of driving tax policy changes.
"The government inherently listens to them because of the role they play in the economy," Mr Njiriani said.
According to the KRA, large businesses have complex business process, which create an opportunity for tax planning and evasion.
"If you are going to be effective in tax administration you need to understand how these companies go about their work to mitigate any risk that may arise from," he said.
Mr Waweru said large business were able to hire tax advisors to ensure they were tax complaint adding that could prove challenging to KRA in gauging exactly how much they are expected to contribute to the exchequer.
"We need to develop our own capacity through the large business unit so that we are able to have a firm grip of what is going on with these big businesses and are able to match their moves," Mr Waweru said.
KRA is expected to review revenue targets for large businesses in an effort of keeping the segment competitive and derive more from tax collection.
Mr Waweru was speaking during the opening of the African Tax Administration Forum (ATAF) with a focus on large business taxpayer units.
The five-day workshop will focus on promoting cooperation among African tax administrations with the aim of improving efficacy of their tax legislation and administrations.
Follow the author at https://twitter.com/MjKaranja