TIMES TOWER | PHOTO COURTESY
The National Treasury is advocating for extensive tax reforms, which would empower tax authorities to have unrestricted access to Kenyan citizens’ data, including real-time financial transactions made through mobile money services. One of the prominent recommendations outlined in the Treasury’s draft medium-term debt strategy is a provision to exempt the Kenya Revenue Authority (KRA) from adhering to data protection regulations. To facilitate this, the government proposes amending the Data Protection Act of 2019 to grant KRA exemptions from its provisions, thereby facilitating easier access to information.
Under the current legislation, data collection is only permitted when a valid explanation is provided, particularly when information concerning personal or private matters is requested. Moreover, the law stipulates that personal data should be obtained directly from the individuals it pertains to. However, with these proposed amendments, KRA would no longer be subject to these requirements and would be authorized to access data freely for the purpose of enforcing tax collection.
To enhance tax revenue collection, the National Treasury suggests integrating at least three systems to expand its reach. Tax administration systems would be merged with the Integrated Population Registry, granting KRA immediate access to birth and death records, with the aim of combating tax fraud related to counterfeit deaths. Furthermore, the tax administration systems would be integrated with telecommunications companies and banks, allowing KRA to monitor money movement in both individual and corporate accounts in real-time. This integration also extends to tracking M-Pesa and Airtel Money transfers to capture income generated through digital platforms.
Additionally, KRA would be able to monitor funds transferred to individual mobile money wallets, facilitating quicker tax collection at the source. To expedite tax collection within the gambling sector, the government proposes integrating tax administration systems with betting and gaming systems, enabling real-time remittance of gaming and betting taxes. The overarching goal is to provide seamless access to information and gain a comprehensive understanding of taxpayers’ economic transactions through big data analytics, ultimately driving compliance.