By Dr. Mohamed Omar
Tax systems go through changes over time, as economies and societies equally evolve. Tax administration in Kenya has been going through reforms, most notably over the last ten years when the intentional use of technology and the attendant changes that come with it were institutionalized.
The recently launched 8th Corporate Plan by KRA crystalizesthe direction of the authority by outlining a host of strategies and approaches that either give a new impetus to the current efforts to strengthen the tax system or introduce new strategies to boost the transformation journey of the authority.
Consequently, a number of recurring themes that characterize the authority’s strategic direction may be discerned. What arethe key planks in the effort to achieve continuous improvement and transformation of the country’s tax system and how might these by realized?
First, enhanced services to the taxpayers is a key consideration that can be looked at from a number dimensions. The refinement of i-Tax and other systems will continue with a view to facilitating compliance with the tax statutes. Beyond that, the application of cutting-edge technologies such as Machine Learning, Artificial Intelligence and Bloch Chain is expected to have significant impact in further deepening the tax administration’s analytics capabilities.
We have seen how tax administration efforts are boosted by data and evidence when undertaking thecompliance efforts. These technologies are bound to entrench that even further by making sense of data from internal and external systems. This guarantees the underpinning clarity and precision in any intervention. For the taxpayer, these will lead to the availability of focused and targeted services, where services are tailored to the needs of specific clusters of taxpayers thanks to the power of data analytics.
To complement the application of technology is the expansion of the physical presence in the country’s different regions. The multi-channel – physical and digital– approach to enhance the availability of human and technological support mechanisms is based on the realization that not everybody is adept at using or having access to modern technology.
Second, policy and administrative simplification is a key anchor in the transformation of any tax system. A simplified tax system is a key parameter in compliance improvement, competitiveness, expansion of the tax base and the attractiveness of the country as a preferred investment destination. The administrative strategies in this respectrevolve around streamlining the processes, systems and the procedures employed, so that it is easier and cheaper to comply.
The idea is to smoothen processes such as exports,imports, tax filing and payments. On the other hand, the strategic intent to simplify the regulatory and policy is about re-looking at the tax statutes for any complexities, a process spearheaded by the National Treasury. Germane to the concept of simplification are the proposed National Tax Policy and the Medium-Term Strategy.
The National Tax Policy is meant to be the overall framework that imbues fairness and predictability into the tax system. For its part, the Medium-Term Revenue Strategy under consideration introduces a slightly longer planning horizon for revenue mobilization measures, thereby also injecting predictability into the system.
Third, a tax system is in a mutually reinforcing ecosystem comprising private sector, multilateral agencies, government entities, counties and individual taxpayers. As a result, forging strategic partnerships becomes an imperative, making it a key thrust in tax administration reforms.
The development of taxation strategies, regulations, and guidelines all require the input of the relevant stakeholders. Not only will the contributions of different stakeholders advance tax administration in terms of content, but they also depict an adherence to the express requirement of the constitution, as well as being a manifestation of a healthy social contract between the government and the taxpayers.
Fourth, a key element in achieving a transformed tax administration is the work ethos, culture and the organisational values. It must be underlined here that what matters is not necessarily the espoused values, but lived values and actions that are reflected in the service that is provided, staff productivity, and level of integrity. Specific measures in this case include a combination of performance frameworks, training and integrity programmes that offer a supportive environment while at the same time emphasizing accountability.
Dr Omar is the Commissioner – Strategy, Innovation and Risk Management at KRA.
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