KRA Commissioner General John Njiraini says this will be done through enrolment of small and medium sized enterprises whose majority are not yet within the tax bracket/CFM
KRA Commissioner General John Njiraini says this will be done through enrolment of small and medium sized enterprises whose majority are not yet within the tax bracket.
He says KRA’s plan is to revamp the turnover tax strategy to be able to focus on the recruitment of the SMEs.
“The authority will engage the SME sector to better understand taxpayers in this category which will place us in a stronger position to design and implement effective compliance strategies, which is critical in developing sustainable taxation systems,” Njiraini said on Monday.
Turnover tax was introduced in 2007 in respect of businesses with a turnover of more than Sh500,000 and less than Sh5 million per annum. It is applicable at a rate of 3 percent on gross sales.
But Njiraini laments that many small and medium businesses do not register voluntarily while those that do, often fail to keep adequate records, file tax returns and settle their tax liabilities promptly.
“…hence in the small business context, opportunities for evasion are high and resources are often scarce for field auditing,” he said.
The authority plans to work closely with counties, to incorporate Personal Identification Number (PIN) to business licensing at the counties, “expanding the scope of services and activities for which PIN is a requirement and adopting a business classification, structure and tax similar to those being applied by the counties.”
Currently there are 8.1milion people in the PIN database.
Njiraini was speaking when flagging off a roadshow to mark the launch of this year’s KRA Taxpayers month.
During the road show, KRA will engage SMEs with a view to improving their tax compliance including registering the businesses as well as assisting them to file their returns.