Damaurine Masira (left), of Kenya Revenue Authority Tax Roll Out office demonstrates how to file online tax return using iTax system to Commissioner General John Njiraini (centre) and Commissioner for Domestic Taxes- Domestic Revenue, Kenya Revenue Authority Alice Owuor during the media breakfast meeting on iTax campaign at Hotel Intercontinental on 29th April, 2015. PHOTO: GOVEDI ASUTSA/STANDARD

Damaurine Masira (left), of Kenya Revenue Authority Tax Roll Out office demonstrates how to file online tax return using iTax system to Commissioner General John Njiraini (centre) and Commissioner for Domestic Taxes- Domestic Revenue, Kenya Revenue Authority Alice Owuor during the media breakfast meeting on iTax campaign at Hotel Intercontinental on 29th April, 2015. PHOTO: GOVEDI ASUTSA/STANDARD

Because majority of SMEs register their businesses with the county governments, the taxman opines that it will be easier to integrate them into the tax bracket and thus enable the Government to meet its financial obligations.

In the new initiative, counties will integrate their operation systems with the national tax system to facilitate capturing of information on small enterprises every day.

KRA Commissioner-General John Njiraini explained that by counties agreeing to develop their own system as well as to integrate it with the taxman?s system, it will be easier to collect tax from all SMEs, who for a long time have been outside the tax bracket despite operating within the economy.

This may be termed as double taxation by local traders as they are currently paying tax to the county government, but Njiraini defended the move saying tax deductions will be based on their turnover tax parameters. Small businesses control a huge percentage of the economy but the taxman is not able to collect tax from them owing to the absence of sound operating structures.

Njiraini said the new initiative is part of a raft of new measures aimed at enhancing efficiency in terms of tax collection to enable the Government achieve its financial obligations.

?We are working together with the county governments so that they can help us get more information from the small traders who for a long time have not been incorporated in the tax payment bracket yet they contribute substantial input to the national economy. In this way we will increase tax collection substantially and thus enable the Government to fund its development projects among other obligations,? he said.

He made the remarks at a Nairobi hotel during the launch of a raft of new changes to the iTax system. ?Soon we will be commencing the initiative on a pilot project basis in two or three counties we have selected before rolling it out in all the other counties,? he added.

Tax defaults

However, the success of bringing SMEs into the national tax bracket will depend on the good will of county governments, also based on the fact that the devolved governments are unable to meet their financial obligations owing to tax defaulters.

Njiraini added that KRA field officers have a mandate to audit businesses but this will be restructured to make it more responsive in terms of focusing on outreach, recruitment and customer support.

In the new iTax system, taxpayers will now be required to use only their pin number when submitting returns for pay as you earn (PAYE).

?The goal of the authority is to simplify the process to ensure Kenyans are tax compliant. iTax has enabled KRA to better understand taxpayer behaviour, which is critical in designing and implementing effective compliance strategies that contribute to the sustainability of our taxation system,? he added.

By Nicholas Waitathu, The Standard

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