KRA Goes Ham On Digital Transformation As It Targets VAT As Leading Tax Head

Kenya Revenue Authority (KRA) has reaffirmed its commitment to transforming tax administration through digital innovation, with a spotlight on making Value Added Tax (VAT) the best-performing tax head in the country.

Speaking at the African Development Bank’s VAT Digitization Seminar held in Nairobi, Commissioner for Medium and Small Taxpayers, Mr. George Obell, highlighted Kenya’s strides in implementing the electronic Tax Invoice Management System (eTIMS), a game-changing reform that has significantly boosted VAT compliance, reduced fraud, and enhanced revenue performance.

“The VAT system in Kenya is undergoing a revolution,” said Commissioner Obell. “Our goal is for VAT to become the most reliable and highest-yielding tax head. VAT is paid by consumers, and businesses are simply agents. When the system is misused, the public and the government both lose.”

eTIMS has enabled real-time transaction monitoring and automated enforcement, helping KRA detect and block fictitious claims and fraudulent invoices. With these capabilities, the Authority has significantly improved the integrity of VAT returns. One key innovation is the automatic rejection of deductions not supported by declared transactions effectively sealing common loopholes.

He said that the system is being upgraded to offer solutions that will improve the taxpayer experience. “The merchants won’t have to go through hoops anymore, they just click and file,” said Obell, referring to the streamlined VAT return process being upgraded.

KRA’s digital strategy is designed to be inclusive. Recognizing the diversity of the taxpayer base, the Authority has adopted a tiered approach. While large companies integrate directly with KRA systems, smaller businesses and informal sector players can use simple, mobile-based solutions such as USSD platforms.

“You can’t have a one-size-fits-all system,” Obell explained. “We are building flexible solutions that are fit for purpose and aligned to business realities across the spectrum.”

He said that these reforms, among many others have seen a 28% increase in VAT revenue, driven by greater taxpayer visibility and a strengthened compliance framework. The digitized system has also shed light on structural gaps, informing ongoing policy reviews on VAT thresholds and equity in the tax regime.

With legislative backing, stakeholder inclusion, and adaptable technology, Kenya’s VAT model is gaining continental recognition as a benchmark for digital tax reform.

Commissioner Obell concluded by urging other countries to adopt structural reforms to support technology. “Digital tax administration is not just about adopting technology it is a structural reform. It’s about building a fairer, more transparent, and efficient tax system for all.”

The seminar was attended by revenue administrations from various East African countries, who shared their experiences on the digitalization of VAT.

Read Also: KRA, The Private Sector Hold A Meeting To Address Compliance Challenges