In the evolving landscape of global finance and administration, technology stands as a cornerstone for unlocking new revenue potential.
Kenya, is proving that the integration of technology into business processes can significantly enhance revenue collection and service delivery.
For example, over the past two decades, the country has made remarkable strides towards cashless and paperless transactions, driven by the widespread adoption of mobile technology and innovative digital solutions.
Globally, tax administrations are recognising the value of integrating technology into their operations to improve revenue mobilisation.
Advanced data analytics and AI offer tax authorities the tools to analyse taxpayer data, identify patterns, and uncover potential tax gaps or fraud.
In its quest to become a digitised revenue administration, Kenya Revenue Authority (KRA) has been at the forefront of leveraging technology to enhance its operations.
These solutions have helped simplified tax processes, facilitated trade and enhanced voluntary compliance. However, there is still room for improvement.
KRA has continuously advanced its technology to improve efficiency. Central to KRA’s digital transformation strategy is the ongoing integration of its systems with other platforms and systems in order to create an end-to-end integrated ecosystem that simplifies tax compliance, reduce administrative burdens, and enhance transparency and visibility.
This is solely to uphold equity in the Kenya’s tax system by ensuring that each taxpayer pays their fair share of taxes.
The Authority has been able to integrate with other systems through its Tax at Source programme, allowing for an almost real-time collection of information and revenue directly at the source. A significant milestone in KRA’s digital transformation is the integration of Betting and Gaming Companies into KRA’s tax system.
This has given KRA real-time access to companies in the gaming and betting sector and streamlined tax remittances.
As a result, revenue collections from the betting and gaming sector registered a 26.2 percent growth to Sh24.269 billion in FY 2023/24 compared to Sh19.224 billion in the previous year from Excise on Betting Services, Withholding tax on winnings from betting and gaming, and Betting tax.
The recent initiative of integrating KRA system to that of banks is therefore welcome and will go a long way in enhancing compliance.
This initiative is aimed at having visibility of the many transactions Kenyans make and ensuring that taxes paid aligned with income earned, not a shilling more nor a shilling less. Notably, some successful businesses pay county licenses but do not remit taxes.
Expanding the tax base by ensuring everyone pays their fair share will help reduce the tax burden on currently compliant taxpayers, particularly salaried Kenyans.
Despite the well-intended nature of this initiative, concerns have been raised, particularly regarding data privacy.
Kenya’s Data Protection Act, 2019, mandates the secure handling of personal data, this includes taxpayer information. The Act sets strict requirements for the collection, processing, and storage of personal data, including taxpayer information.
The Tax authority and tax professionals are required by law to adhere to data protection principles and regulations at every stage of processing taxpayer data.
Like many other private and government organizations, KRA handles and has access to most vital data of taxpayers. The Authority has prioritized data protection and made significant strides in complying with the Data Protection Act in all its revenue mobilisation initiatives.
Some of the achievements include Implementation of a data protection policy that ensures that staff and taxpayers are aware of their responsibilities and rights.
The Authority has also registered as a data controller and processor with the Office of the Data Protection Commissioner and appointed Data Protection Officers to ensure that these initiatives are not only in paper but actively implemented.
KRA has also adopted regular reviews of processing activities to ensure that all processing activities are done in accordance with the data protection principles. The Authority equally carries out data impact assessments for all processing activities that deal with personal data.
This means that KRA understand the limits of data privacy and does not in any way intend to infringe individual’s privacy. Like any other initiatives, the Authority will always partner with the banks and relevant stakeholders to ensure that the implementation of this initiative is in accordance with the law and does not inconvenience any taxpayer or institution.
The sentiment that KRA will break the law or use other illegal means to access bankers data should be out of picture. It is also important to appreciate that in the spirit of partnership, KRA has been holding stakeholder engagements with relevant parties to address concerns.
Technology must remain central to KRA’s strategy for maximizing full revenue potential. Going into the future, KRA should design and deploy new technology architecture that will create market customized solutions by enabling other stakeholders to integrate with KRA systems.
KRA should increasingly rely on data analytics, Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), and Application Programming Interface (API) because this is currently the global standard.
Further, the ongoing integration of new technologies and the development of innovative solutions will not only enhance compliance but also improve customer experience and service quality. In this digital age, technology is not just an enabler but a critical driver of Kenya’s revenue potential and overall economic development.
