KRA Sees Huge Informal Sector’s Untapped Tax Base

The Kenya Revenue Authority (KRA) sees an untapped big tax collection base in the informal sector, which might lead to an increase in revenue collection.

KRA promised to solve the sector’s difficulties in order to incentivize and onboard them into the tax net.

KRA Commissioner General Humphrey Wattanga stated that the sector, which employs over 15 million people and accounts for 83 percent of the country’s entire labour force, has significant revenue potential and should be made easier to comply with.

“One of the initiatives under KRA’s tax base expansion programme is netting the informal sector into the tax bracket, the majority of whom are the MSMEs,” Wattanga said.

“This, therefore, informs the need to design strategies and policy interventions to enable KRA to tap this sector into the tax bracket,” added Wattanga.

Wattanga made the remarks at the 2023 Annual Tax Summit in Nairobi.

The Summit, which is held each year in October, provides a forum for tax experts, policymakers, public servants, technocrats, civil society, business sector actors, and academia, among other stakeholders, to discuss relevant topics affecting tax systems.

Participants are selected from around the country and around the world.

KRA announced that it will collaborate with the National Treasury to develop policies to simplify, unify, and minimise the number of taxes owing to the informal sector.

Wattanga also stated that the government will educate traders on the importance of paying taxes.

The tax base is being expanded at a time when the KRA is scheduled to earn Sh2.57 trillion for the fiscal year 2023-24.

Tax experts and technocrats at the summit emphasised the importance of developing policies that will result in a stable and predictable tax system.

This, they claim, will boost tax morale and inspire justice, openness, and accountability.

“Enhancement of tax policies enables the Government to grow tax revenue, provide legal framework for introducing tax incentives, provide guidance, ensure certainty and establish coherence,” Principal Secretary for Economic Planning James Muhati said.