The National Treasury is putting forward extensive tax reforms that could grant significant powers to tax authorities, enabling them to access the financial data of Kenyan citizens, including real-time mobile money transactions.
One of the pivotal proposals outlined in the ministry’s draft medium-term debt strategy revolves around exempting the Kenya Revenue Authority (KRA) from existing data protection regulations.
To achieve this goal, the government suggests amending the Data Protection Act of 2019 to create an exemption for the KRA, facilitating smoother access to information.
Under current regulations, data collection requires a valid explanation, especially when seeking information regarding individuals’ private or family matters. Moreover, the law mandates that personal data should be gathered directly from the individuals concerned.
The proposed amendments seek to free the KRA from these restrictions, allowing them to access data more easily to enforce tax collection.
To enhance tax revenue collection, the National Treasury recommends integrating at least three systems to broaden the tax collection net.
Firstly, the tax administration systems will merge with the Integrated Population Registry, providing the KRA with real-time access to birth and death records. This move aims to curb tax fraud related to false claims of deaths.
Secondly, the tax administration systems will integrate with telecommunications companies and banks. This integration will grant the KRA the ability to monitor the real-time movement of money in individual and company accounts, offering greater transparency.
Additionally, the KRA will track transfers made through mobile money services like M-Pesa and Airtel Money, helping to identify earnings from digital platforms.
Furthermore, the tax authorities will gain visibility into money transfers to individual mobile money wallets, facilitating swifter tax collection at the source.
In a bid to expedite tax collection within the gambling industry, the government suggests integrating the tax administration systems with betting and gaming platforms. This integration aims to ensure real-time remittance of gaming and betting taxes.
The ultimate goal of these proposed reforms is to provide seamless access to information for a comprehensive understanding of taxpayers’ economic transactions through the application of big data analytics, thus promoting tax compliance. This vision is outlined in the draft debt strategy paper.