NAIROBI, Kenya, Nov 22 – The implementation of online filing of tax returns by the Kenya Revenue Authority has seen a significant improvement in the ease of paying taxes.
A report by the World Bank on Paying Taxes shows Kenya’s global rank improved from 125 in 2015 to 92 in 2016 out of 190 countries as a result of the iTax system which requires taxpayers to file tax returns online.
The system has seen a reduction of time taken to file taxes in Kenya from 191 hours to 185 hours against a global average of 240 hours, though the Total Tax and Contribution Rate remained nearly the same at 37.4 percent.
Kenya also reduced the number of payments per year from 31 to 26 but still fell short of the global average of 24.
The ranking is based on; total tax and contribution rate, time to comply, number of payments and post-filing index.
Titus Mukora, PwC Tax partner, says iTax has made the process of transferring data from taxpayers to KRA more seamless.
“It has also ensured that the data that KRA has is up to date and therefore you have a real-time process of interrogating a taxpayers returns without pulling manual files and other efficiencies have been removed by the system,” says Mukora.
The report notes that most of the economies sampled benefitted from moving tax payments online with governments implementing new web portals and a higher adoption of the e-systems by taxpayers.
World Bank Public Sector Specialist Moses Kajubi says that although Kenya has made great strides in reforming the tax regime, more can be done to consolidate the gains.
“You could, for instance, ask taxpayers to pay their NHIF and NSSF with the PAYE to KRA, then KRA will be responsible to forward payments to other organizations instead of the taxpayer visiting three places at the same time,” says Kajubi.
The Paying taxes report measures the ease of paying taxes across 190 economies and in doing so encourages governments to move towards more efficient tax systems. Paying taxes is one of the indicators of the World Bank’s Doing Business Report that was released in October where Kenya was ranked position 80 from 92 in 2016.