With the new raft of changes having taken effect, I am of the opinion that tax avoidance will be an active thought for the majority of those currently remitting their dues, unless the Kenya Revenue Authority (KRA) moves swiftly to mitigate this and bring more into the fold.
I made time to attend the 4th Annual Tax Summit and moderated a segment that looked at technology as an enabler where in collaboration with other panelists we explored new frontiers for revenue collection and administration. It was indeed welcome that the KRA has an active strategy, innovation and risk department that engages with business associations like the Kenya Association of Manufacturers (KAM) and The Kenya Private Sector Alliance (KEPSA). There is however an invisible bottom that needs to be activated for balanced tax inclusivity. The gig economy, e-commerce and the growing adoption of cryptocurrencies are now part of the mix, adding to the already complex, albeit slightly handled task of mopping up tax obligations from the mSME and individual base.
From the conversation, I distilled two must do actions by the Authority vis-à-vis their mandate and ambitious targets in the medium to long term.
Open innovation mindset
The first is to adopt an open innovation mindset, with the key agenda of opening up core parts of iTax and complementing systems to third parties via robust and secure Application Programming Interfaces (APIs).
This will empower independent software developers and software development companies to officially embed tax compliance across all manner of consumer facing applications, creating seamless experiences primary of which are attribution, submission and claims; which can then be only a click away.
The second is to become an ally to the individuals hustling and active in the gig economy plus mSME operatives. The move here is simple; address a key pain point.
Ranking high for those in this pool is the common situation of being invoice rich but cash poor. The KRA should look at developing direct market interventions that will empower users get paid faster. I imagine the KRA as a payments mediator with deep integrations to all banks and mobile money platforms as an unbiased third-party on commercial transactions both big and small. Smart contracts that would ensure prompt payment will more than likely endear the Authority to many.
How about having its own SaaS accounting platform offered for free, activated and mapped to every new tax account automatically with ready payment rails similar to what banks and others in the fintech space are working to provide?
By changing tact, providing additional value and reimagining the relationship with the addressable market beyond that of collector, the KRA can make short work of its targets while empowering the government to perhaps ease the net individual or business tax burden.