As with other sectors of the economy and in line with the changes in society, tax administrations worldwide are going through transformations. These shifts are occasioned by the dynamism and complexities in the environments in which they operate, as technology and business models applied in the diverse economic activities equally evolve.
Taking cognizance of these rapid changes, tax administration in Kenya has gradually been moving towards data and knowledge-based decision-making, thereby putting the Kenya Revenue Authority (KRA) on the path to becoming a knowledge-based organisation.
In broad terms, a knowledge-based organization is one that gives prominence to the creation, dissemination and application of knowledge, information and data in developing and implementing policies, systems and processes. KRA has been employing a number of approaches to achieve this. These include thought leadership, knowledge management and the innovative use of modern technology. Let us look at these approaches, each in turn.
First, the KRA routinely convenes meetings with industry associations with a view to discussing topical issues that have implications on taxation. These kinds of regular fora allow for open and transparent deliberations between different sector players and the tax authority. Here, challenges are discussed and mutually beneficial solutions are devised, sometimes even informing policy direction.
Thought leadership is best exemplified by the institutionalization of the annual tax summit, where national and international experts come together to share ideas, insights and experiences on tax administration. In its third year now, the 2017 tax summit was held between 29th November and 1st of December. Bringing together representatives from regional tax authorities, academia, industry players and tax practitioners, this year’s summit managed to tackle different topics of interest.
These include the use of data and advanced analytics in enhancing tax administration, strategies on how to tackle illicit financial flows, resource mobilization in the counties, trade facilitation as well as master-classes that revolved around the extractive sector and management of excise duty. The enhanced knowledge by way of outputs from the various panel discussions and keynote speakers is currently being crystalized into implementable actions.
Second, in recognition of the increasing role of knowledge and information as a source of competitiveness and productivity, KRA has embraced knowledge management. This has been implemented through the creation of a dedicated knowledge management function to spearhead, coordinate and manage knowledge across the organization. The overarching goal of the function is to engender improved performance by inculcating a culture of creating, sourcing, and sharing information and knowledge.
To achieve that, a number of initiatives have been put in place, prominent among which is the establishment of ‘communities of practice’, which are informal groupings brought together by common interest in specific areas of work or expertise.
Other notable knowledge management practices that have been implemented include the establishment of an online knowledge-sharing platform and the development of a comprehensive knowledge repository. The latter is a central database where lessons learned from the myriad projects undertaken by KRA, insights from other jurisdictions whose tax administrations went through similar development trajectory to Kenya’s, research outputs and field reports are succinctly summarized, codified and stored for future reference.
Third, the prevalent adoption and use of technology increasingly underpins tax administration in the country. There has been a marked shift towards technology-based processes and systems, the oft-cited and ubiquitous i-Tax system being an embodiment of that transformation. Indeed, the impact of i-Tax as an enabler of taxpayer interactions with the tax authority was most evident in the latest World Bank’s global Ease of Doing Business ranking, where the specific indicator on paying taxes saw Kenya’s ranking jump 33 places, from position 125 to 92.
The continuous innovation through the application of modern technology is nonetheless, not confined to i-Tax, for there is a plethora of other technology-driven programs that are at various stages of implementation or integration. These are projects that are all meant to facilitate taxpayers and thereby enhance tax compliance, such as those related to customs processes, management of customer interactions and those concerned with data analytics.
The sum total all these initiatives is not only to bring about efficiency in the way tax is administered through internal and external system integrations, but also to ensure that strategic decisions and policies are anchored on solid data and evidence.
(Dr Omar is the Commissioner for Strategy, Innovation and Risk Management at the Kenya Revenue Authority (KRA), [email protected])