KRA To Facilitate Informal Sector Uphold Compliance

Kenya Revenue Authority (KRA) has pledged to address challenges faced by the informal sector in a bid to incentivize and onboard the sector players into the tax net.

Speaking during the 2023 Annual Tax Summit, KRA Commissioner General Mr. Humphrey Wattanga said that the sector which is estimated to employ about 15 million people, accounting for 83 percent of the country’s total labor force, has a great tax potential and should be facilitated to uphold compliance.

“One of the initiatives under KRA’s tax base expansion program is netting the informal sector into the tax bracket, the majority of whom are the MSMEs. This, therefore, informs the need to design strategies and policy interventions to enable KRA to tap this sector into the tax bracket.” Said Mr Wattanga.

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KRA will work with the National Treasury to establish policies that will simplify, harmonize, and reduce the multiplicity of taxes obligated to the informal sector. Mr Wattanga said that KRA will educate traders to appreciate the need for paying taxes.

Commenting during the 2023 Annual Tax Summit, tax experts and technocrats reiterated the need to develop policies that will create a certain and predictable tax system. This, they said, will improve tax morale and subsequently inspire fairness, transparency, and accountability. It will also enable simplicity and ease of tax compliance among taxpayers. The experts noted that good policies will enable the tax system to absorb economic shocks, broaden the tax base, and enhance tax compliance.

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Addressing participants during the event, Principal Secretary for Economic Planning Mr James Muhati said that resilient tax systems can ensure that revenues recover in the face of external economic shocks. He said such systems can adjust to changing tax practices and circumstances, both locally and internationally. The PS noted that a good system can only be established through a review of policies. He added that such systems can seal revenue gaps and contribute towards the realization of a robust domestic resource mobilization agenda.

“Enhancement of tax policies enables the Government to grow tax revenue, provide a legal framework for introducing tax incentives, provide guidance, ensure certainty, and establish coherence,” said the PS.

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The Commissioner General Mr Humphrey Wattanga appreciated the tax experts for presenting ideas and recommendations aimed at enhancing revenue mobilisation. He said KRA had taken note of their recommendations and would consider them in administering taxation.

“Participants have recommended regular reviewing and revision of tax laws to promote predictability and accountability of the tax system. KRA will continue working with the National Treasury to develop policies aimed at creating a conducive environment for businesses to grow. I believe that these recommendations will help us enhance voluntary tax compliance and support our country’s development agenda,” said Mr Wattanga.

The Summit, held annually in October, provides a platform for tax experts, policymakers, public servants, technocrats, civil societies, private sector actors, and academia, among other stakeholders, to engage on pertinent issues that touch on tax systems. The participants are drawn from the country and internationally.

The Summit aims to improve tax systems in Africa and beyond by sharing ideas and innovations, enhancing the capacity of tax officials through continental interactions, creating a platform, and establishing a continental cooperative framework.

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