The Role of Technology and Manufacturing in Revenue Administration

BLOG 30/10/2018

The last day of the 4th annual tax summit focused more on revenue administration with in depth discussions on operational systems and how the Kenya Revenue Authority could increase efficiency in the manner in which they serve taxpayers.

The three sessions of the day centered on two main topics; Technology as an enabler in revenue administration and how to accelerate the growth and competitiveness of the manufacturing sector in Kenya.

The success of tax administration is heavily dependent on how efficient the relevant systems are. Governments all over the world have embraced technology as the key driver of government operations. The first session was pegged on trying to identify the innovative technological solutions that the authority should look to adopt in the near future. Oracle managing director, Dr. Corine Mbiakectha spoke of the need to integrate emerging trends into our systems. She spoke of the value of big data and cloud computing in information management and how KRA can use the data in their possession to monitor compliance. The issue of land also came up and how spatial data systems have helped in identifying geographic locations anywhere on earth. This will help in knowing the locations of various businesses. Additionally, KRA was urged to seek public-private partnerships with different companies and organizations in the private sector especially companies that could help provide technological solutions and infrastructure needed while also helping with the deployment and integration.

On the manufacturing front, the issue of counterfeit goods was raised several times with Kenya Breweries Managing Director, Ms. Jane Karuku lamenting on how competing with illicit brews has often hampered how much revenue they generate. She however lauded the government for its increased efforts in recent years to help curb the menace. Manufacturers also argued that reducing Import Declaration Fees and Railway Development Levy would go a long way in helping them reduce manufacturing costs while also encouraging Kenyans to buy products made in Kenya as opposed to importing second hand goods from abroad. It goes without saying that consumers will always turn to cheaper products when the government insists on continually raising the taxes of products from companies in the formal sector. Reduced fees and more incentives would greatly boost the manufacturing sector and as a result lead to creation of more revenue which is good for both the businesses, the authority and the government at large.

In the last and probably the most interesting session, the areas of ecommerce and mobile commerce took center stage. Through the internet and smartphones, majority of potential customers are now found online and nearly every business today is investing in having an online presence. KRA is yet to find an elaborate mechanism of how to reap from the millions in revenue online entrepreneurs are making. Perry Roach, whose company Netsweeper Inc. has been successful in helping governments in different parts of the world in setting up ways to collect VAT from online businesses. He spoke of the need to have internet tax laws that will guide the framework used to collect these taxes but also spoke of some of the challenges including the fact that online businesses are found on the worldwide web meaning these business exist everywhere on the internet and the laws will only be applicable in the country?s jurisdiction. Lastly, the session was capped off by a handing over ceremony where members of the tax education unit of KRA handed over a tax education curriculum development report to the Kenya Institute of Curriculum Development (KICD) with the aim of having tax matters introduced in the new school curriculum that will take effect next year.

In conclusion, the last day highlighted just how much more KRA needs to do in order to improve revenue administration and tax base expansion and the key role technology will play as the main driver of government operations.

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