Nowhere to hide: KRA to start monitoring mobile money to reduce tax evasion
The Kenya Revenue Authority (KRA) is proposing to monitor your mobile money by integrating KRA tax system with M-Pesa to reduce tax evasion.
The 2023 Budget Policy Statement released by the exchequer on Wednesday for the 2023/24 fiscal year, the government is seeking access to individual and companies’ mobile money transaction records in a move that is intended to open a new front in the fight against tax cheats.
KRA is targeting mobile money as part of the agency’s financial data gathering scheme that is meant to monitor businesses and individuals who are not paying their fair share of taxes.
In this year’s fiscal policy, the government targets to grow tax revenues above 17.8 per cent of the GDP in the aforementioned financial year 2023/24, the targeted collection being Sh3 trillion, and above 18 per cent of GDP over the medium term, its targeted collection being Sh4 trillion.
If KRA gets its way, it will be able to compare figures in tax returns with transactions on mobile wallets. The taxman will flag differences in remittances on M-Pesa, Paypal, and Pesalink and returns for tax evasion.
KRA will store, and match data on transaction flow on platforms like M-Pesa, Paypal, and Pesalink. The information will allow the authority to watch for consistency and cub tax evasion on incomes from online sources.
Monitoring M-Pesa transactions will help KRA tax incomes from the informal sector. Moreover, it will be able to tax what most Kenyans term as “side hustle” including online gigs.
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Furthermore, data from M-Pesa will force traders who avoid taxes through pay bills to contribute to the national tax basket.
Some traders evade taxes imposed on pay bills by urging customers to send money directly to their personal M-Pesa wallets.
Telcos, which had been targeted to share data on mobile money transactions, especially on the business platforms with pay bills and till numbers, have previously opposed the move and KRA is said to be in discussion with the firms to access the information as well.
Last year, President William Ruto said that every Kenyan citizen in possession of a national identity card (ID) will be required to have a KRA pin number.
Speaking during the KRA’s Taxpayers event which was held at KICC, President Ruto said the directive would help to scale up tax compliance measures by the Authority in a bid to increase tax income.
He cited data by Safaricom Telco Company where about 30 million people are registered under M-Pesa against 7 million people who have KRA Pin numbers saying that his government would leverage technology to increase the tax base and enlist more taxpayers.
“There are only 7 million people with KRA pin numbers. At the same time, in the same economy, Safaricom’s M-Pesa has 30 million registered customers, transacting billions daily. The fact that this opportunity remains unclear to KRA demonstrates why radical changes are necessary. Every Kenyan with an ID should have a PIN number,” President Ruto said then.
“Technology and a considerate, fair, and professional mobilization will do the job quite well. Safaricom, a telco, has registered more people than KRA, a powerful state organization. It is very clear that the magic lies in technology and strategy, not in power and resources.”