4th Annual Tax Summit Highlights: How Tax Base Expansion is Key to the Big 4 Agenda

BLOG 30/10/2018

Kenya Revenue Authority held its 4th Annual Tax Summit from the 15th to 17th October, 2018 at the Kenya School Kenya School of Monetary Studies in Ruaraka.

The Tax Summit brought together over 1000 delegates from various organisations and countries to discuss the acceleration of socio-economic growth through expansion of the tax base in line with the government's BIG 4 Agenda (affordable housing, universal healthcare, manufacturing and food security).

The focus of the first day (Tuesday 18th October) was the steps the Authority and the government at large should take to expand the revenue base. Three sessions were held on that day each with a different angle on how expansion can be achieved. 

The first session focused on how trade between African countries would serve as a huge boost for the entire continent and how the government would benefit greatly from this as revenue avenues will increase. The government should play its part by making it less punitive to trade across Africa meaning more wealth will be created and as a result more revenue. In the keynote address which was done by former AU vice chairperson Amb. Erastus Mwencha, the steps made by the African Union in the journey toward making the continental free trade area a reality were hailed. Additionally, the need for Kenyans to embrace a culture of good values such as hard work and integrity was emphasized as this is the only way to deter corruption once revenue is collected.

Social services were the focus of the next session with a primary focus on affordable housing and universal healthcare as they are the social pillars of the BIG 4. The recently approved finance act 2018 brought with it the housing levy tax of 1.5% for both employers and employees and it featured heavily in the conversation. Some panellists urged KRA to focus on boosting revenue collection from the real estate industry as some persons have several properties that managed to evade the radar of the authority. Another way tax base expansion could facilitate social services is through addressing compliance gaps in VAT with several business owners still able to evade paying taxes. The panellists and the audience also urged the government increase its efforts in setting up the infrastructure that will support these houses namely: lighting, drainage, roads and several others. This will in turn lower the developers cost and eventually the cost of the house.

The third and most interactive session of the day featured the MSME sector and how the authority could add this group to the tax regime. As the CEO of the Kenya National Federation of Jua Kali Association Mr. Richard Muteti noted, the MSME sector is the largest employer in Kenya with Micro business/small traders employing more than 16 million Kenyans. With formal employers being the largest group of taxpayers, the authority was urged to find mechanisms to engage the informal sector to ease the burden on the existing crop of taxpayers. Representatives from the micro economy said they were ready and willing to it down with the authority to discuss how they can be brought into the tax regime. They expressed a feeling of being neglected and ignored by the government as the reason why most of the small traders were reluctant to pay tax.

Additionally, the authority was also urged to make it easier for small traders to be able to pay tax by simplifying the interfaces on the iTax platform. Partnerships with private entities was encouraged as means to increase accessibility. Lastly, tax education should be intensified to create awareness as many of the small traders still don’t have enough information on taxes and what tax obligations they have. The session was concluded by Mr. Silas Santiego, a tax audit advisor for the Internal Revenue Service of Brazil. He spoke about the steps in terms of policy that their government had taken to bring in the informal sector. He mentioned the need to adopt policies that are specific to the MSME sector.

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