Kenya Revenue Authority Leveraging Technology to Hit Targets

The Kenya Revenue Authority (KRA) is continuing to surpass its tax collection targets, despite a challenging economic environment caused by the COVID-19 pandemic, according to local media reports.

In December, KRA collected 166 billion Kenyan shillings ($1.5 billion) against a target of Sh164 billion, representing a 3.5% increase over the same period last year. In January, the customs and border control department collected KES 54.919 billion, reflecting a growth of 9.7%. Domestic taxes also registered improved performance at 97.1%, the best progress since the start of the pandemic, and excise domestic taxes recorded a growth of 42.8%.

‘The positive performance is widely accredited to the resurgence of the economy,’ Commissioner General Githii Mburu noted.

Among the key measures being used by KRA to combat illicit trade and streamline its revenue collection methods, is the Excisable Goods Management System (EGMS).

The system, which is provided by SICPA and which includes the use of tax stamps and remote automated monitoring of domestic production lines, was successfully rolled out in 2013 on alcoholic drinks and cigarettes, with KRA immediately registering significantly higher excise tax collections on these products.

In a second phase, the system was expanded, in 2019, to soft beverages and bottled water, as a result of which the number of registered manufacturers and importers operating in these markets increased sharply – by as much as 286% in the bottled water sector.

Through a combination of the EGMS, the KRA intelligence unit and support from other state agencies, including the police, KRA has successfully closed in on rogue industries and traders, in a spirited war aimed at curbing illicit trade in the country, reports The Star.

Nevertheless, a recent market survey conducted by Kenya’s Anti-Counterfeit Authority, indicates that illicit trade, in general, denied the Kenyan government KES 153.1 billion ($1.4 billion) in 2018, up from KES 129.72 billion in 2017, representing an 18% increase in tax revenue losses. (The survey was, however, essentially based on data for imported goods and did not include domestic industry-based illicitly traded products, the reason being that – according to the survey –‘government agencies responsible for collection of such data had not disaggregated data to show domestic industry as a source of seized illicitly traded products.’) 

The survey stated that most revenues were lost in the food, beverage, and non-alcoholic drinks sector (accounting for 23% of total illicit trade), followed by textiles and apparel at 20%, building, mining and construction at 14%, energy, electrical and electronics (including mobile phones) at 11%, and metal and allied materials at 7%.

It is encouraging to note that tobacco and alcohol products, which are highly regulated under the EGMS system, did not figure in the list of sectors with the highest amount of lost revenues – although, as stated above, the illicit trade of domestic goods (and a large percentage of cigarettes and alcohol consumed in Kenya are produced domestically) was not included in the survey.