In a detailed brief tabled before the Parliamentary Committee on Finance, Planning and Trade, the National Treasury Cabinet Secretary Henry Rotich assured that solid interventions have been formulated to guarantee KRA’s enhanced performance in the current financial period.
The Cabinet Secretary who was accompanied to the committee session by KRA Commissioner General John Njiraini acknowledged that the tax collector had failed to meet the first quarter targets by a marginal degree.
To sustain growth, KRA, Rotich said, will be focusing on a programme geared at tightening the customs valuation process through stricter declarations vetting while enhancing its staffing capacity at all release points.
A promise by the government to clear its debts owed to suppliers and related parties is also expected to spur tax collection growth. Already, the National Treasury has given an undertaking to robustly enforce clearance of project costs such as infrastructure bills owed to various contractors.
On the domestic taxes front, KRA, will be seeking leverage on the new Withholding tax provisions and data mining from the new IFMIS systems recently deployed across the public sector. Such data mining on the IFMIS platform will help KRA to exploit information on suppliers doing business with both County and National governments by vetting their Income and VAT declarations.
In the first quarter period under review, Rotich disclosed that KRA had managed to collect more than Sh249billion against a target of Sh267billion representing a 93.3 percent performance rate.
He attributed the performance in the first quarter to changes in the composition of imports towards low tariff goods which adversely affected import revenues. He further noted that the performance had also been affected by a sharp increase in the proportion of non-dutiable imports which at stood at 41.6pc mainly due to national carriers Kenya Airways fleet expansion programme and the closely linked removal of VAT on aircraft and aircraft spares that was removed through the Finance Act, 2014.
On a short term basis, KRA, the Cabinet Secretary, confirmed is also seeking additional funding to finance its new initiatives geared at enhancing tax compliance. If successful, the ongoing discussions on funding which have been ongoing over the years could see KRA funding pegged at 2pc of total revenue collected.
“As a result of the lower than expected growth in the first quarter, the growth required to meet the balance of FY 2014/15 target (October 2014-June 2015) is 18.6pc which compares with average of 15.3pc recorded for the same period over the last decade,” Rotich said. And added; “stronger growth will be required for the balance of the year and full advantage will be taken of new measures introduced in Finance Act, 2014.”
The Authority, he added has also adopted new controls geared at improving the tax payers audit performance while placing more than 67 of its senior staff members on three-year performance contracts.
The authority will also be pursuing a process to fast track the resolution of pending tax disputes at the Tax Appeals Tribunal which could see it unlocking more than Sh25 billion in disputed assessments.
As part of the KRA’s efforts to unlock another Sh33 billion held up in judicial court process, the authority has petitioned the Judicial Service Commission for the establishment of a High Court Tax Division.