NAIROBI, Kenya, Feb 7 – The International Monitory Fund (IMF) has singled out Kenya Revenue Authority’s i-TAX system and the Excise Goods Management System (EGMS) as contributors to increased revenue collection.
In the first review of Kenya’s performance, completed end of January 2017, the IMF notes that the systems combined reinforce efficiency, transparency and accountability.
IMF states that fiscal developments in the first quarter of the financial year 2016/17, were characterised by a marked improvement in revenue collection
“Receipts of domestic VAT and excise revenues were particularly high reflecting improvements in revenue administration from the i-TAX and EGMS, new i-TAX measures, and the re-introduction of VAT withholding tax,” says the IMF review.
Key reforms in KRA’s Domestic Taxes Unit have greatly spurred revenue collection even amidst challenging macro- economic environments.
The Authority has for instance twinned the Capital Gains Tax (CGT) payment with payment of Stamp Duty oni-TAX to expand tax collection.
The EGMS system, which was introduced four years ago, has so far led to increased excise tax compliance by 45 per cent.
In the past, KRA found it difficult to track transactions involving transfer of property with reasons that it was hard to confirm if CGT had been paid before registration of property.
The Kenya Revenue Authority now requires one to prepare self-assessment computations, subject to approval, to determine the capital gains arising from the property sales. Once the property is transferred the taxpayer will be required to prepare the CGT 1 form and submit it to the KRA by the due date.
i-TAX was launched in October 2013, to enhance service delivery to the public. The system is expected to revolutionise administration in the country by enhancing revenue collection while sealing gaps that cause revenue losses.
The EGMS new generation excise stamps, on the other hand, is applied on wines, spirits, tobacco, and beer. It is verified using smartphones in efforts to seal tax leakages.