Treasury Targets Telcos, Rental Properties To Raise Revenue Collection To Sh2.8trillion

The National Treasury plans to integrate the KRA tax system with telecommunication companies, and the informal sector coupled with implementing rental income tax measures to increase revenue collection to Sh2.8 trillion in the 2023/24 financial year.

The move is set the see Kenya Revenue Authority (KRA) implement systems to monitor mobile money transactions, payments in the informal sector, and rent payments by mapping rental properties to expand its tax base.

The measures outlined in the 2023/24 Budget Policy Statement are part of the administration’s economic turnaround plan to scale up revenue collection to fund the total budget for the next financial year which is projected at Sh3.641 trillion.

Expansion of the tax base has been a key part of President William Ruto’s administration.

In October last year, he tasked KRA to follow up on Safaricom’s M-Pesa success noting that there are only 7 million people with KRA pin numbers while M-Pesa has 30 million active users.

“The fact that this opportunity remains unclear to KRA demonstrates why radical changes are necessary. 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 power and resources,” Ruto said.

KRA’s plan to integrate its systems with telcos means it will start monitoring mobile money transactions which grew by 15.2 percent in the 11 months to November last year.

Data from the Central Bank of Kenya (CBK) show the value of mobile money transactions hit Sh7.2 trillion for the 11-month period, up from KES 6.24 trillion.

As part of the tax policy reforms, Treasury has also tasked KRA to reduce the gap in Value Added Tax (VAT) collections from 38.9 percent to 19.8 percent of the potential by fully rolling out the electronic Tax Invoice Management System (eTIMS).

The new automated registers will allow KRA to receive sales and invoice data daily curbing tax evasion and in turn boosting revenue collections.