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KENYA REVENUE AUTHORITY

CIAT TECHNICAL CONFERENCE

Presented by

Pancrasius Nyaga
COMMISSIONER OF DOMESTIC TAXES
LARGE TAXPAYERS OFFICE

AMSTERDAM, NETHERLANDS OCTOBER 2012

TITLE: SMART COOPERATION

COOPERATION AS A TOOL IN COMPLIANCE RISK


MANAGEMENT STRATEGIES

1.0 INTRODUCTION
Kenya Revenue Authority (KRA) is a Semi-autonomous State
Corporation under the Ministry of Finance established in 1995
by The State Corporations Act Cap 469 of the Laws of Kenya.

KRA is charged with the responsibility of collection,


accounting for and administration of Government Revenue(s).

The governance structure comprise of:

Board of Directors

Commissioner General

Six (6) Commissioners as departmental heads

PREAMBLE TO COOPERATION
Challenges

Non filers

Late payments

False declarations and fraudulent tax refund claims

International tax issues-Transfer Pricing

Unreliable tax agents

Limited automation (Manual processes)

Opportunities

Political & Legal environment

Stakeholders (Competitors, Regulators, Whistle blowers, etc)

Automation-appreciation (ITMS)

Voluntary disclosure-Self assessment

Staff motivation- professionalism, integrity, etc

2.0 ENHANCING EFFECTIVE COOPERATION


2.1

International Scene

Membership to International Tax Bodies e.g. CIAT, CATA,


OECD, ATAF, etc
Tax Information Exchange Agreements (TIEAs)
Double Taxation Agreements (DTAs), including MAPs and
APAs

Transfer Pricing Legislation-based on arms length principle

Regional Authorities Technical Forum (EARATC) affiliation

2. 2 Domestic Scene
At the Domestic level, KRA cooperates with various
stakeholders as follows:
(i) Public Institutions

Registrar of Companies

Registrar of persons

Ministry of Foreign affairs

Ministry of Finance & Public Procurement Oversight


Authority

Department of Mining and Geology

Anti-Corruption Agency (EACC)

2.2 Domestic Scene Cont


(ii)Tax Intermediaries e.g. Auditors/Tax Agents-Enhance
compliance and information exchange with TPs (clients)
(iii) Regulatory bodies (CBK, ICPAK, CMA, IRA,ERC, etc)

(iv) Utility Companies (KPLC, NWSC, etc)


(v) General public (whistle blowers vs reward schemes)

Benefits of Cooperation
(i) Reduced cost of compliance
(ii) Improved service delivery to Taxpayers
(iii) Enhanced voluntary Compliance
(iv) Reduction in tax evasion and frauds
(v) Enhanced revenue performance (Kenya-US$ 1.99 B
2002/03 to US$ 8.54 B 2011/12)

(vi) Improved image of KRA

IMPACT OF INCREASED REVENUE COLLECTION


IMPROVEMENT IN INFRASTRUCTURE

IMPACT OF INCREASED REVENUE COLLECTION


IMPROVEMENT IN INFRASTRUCTURE

3.0 SMART COOPERATION


Modern Approach

Various reform initiatives that have improved compliance


risk management processes include:

Online processing of Tax Compliance Certificates

Automation of business processes-collaboration of


information

Excise stamps management-Spirits & Tobacco industries

Online data validation & reconciliation of revenue

KRA ONLINE SYSTEMS


NO

SYSTEM

SUPPORT

Integrated Tax management Systems Registration


(ITMS)
Filing
Revenue reconciliation

Common Cash Receipting System


(CCRS)

Online processing of payment receipts

Electronic Cargo Tracking

Online monitoring of transit cargo

Flow Meters

Aligning declarations to flow meter


readings-Spirits industry

Online monitoring of sale transactions

GPRS enabled Electronic Tax


Registers
SIMBA

clearing and payments


Vehicle Management System (VMS) It enhances registration and transfer of

Linking document lodgment, processing

motor vehicles

4.0 KEY ELEMENTS FOR SMART CO-OPERATION

Key enablers of cooperation between revenue


administrations and other stakeholders include;

Automation

Legislation

Political goodwill

Professional staff with high integrity

5.0.CONCLUSION
Many challenges face revenue authorities hindering
achievement of their full potential in revenue collection.

However, revenue administrations should put more focus on


the various opportunities available to them.
Focus on effective engagement through Smart cooperation
is key to the success in enhancing compliance risk
management. This ultimately leads to enhanced revenue
collection among other benefits.