KRA Regains Power to Spy on Tax Evaders Mobile and Bank Data

The Kenya Revenue Authority (KRA) has regained powers to access individual’s and businesses’ financial transaction data from third parties like banks, mobile telephone firms and schools in order to assist in the fight against tax evaders.

The Court of Appeal reinstated sections of the law allowing KRA to get data from third parties on persons or firms suspected to be involved in tax fraud.

Powers granting the taxman access to evaders mobile and bank transaction data were frozen by the High Court.

In May 2018, Justice George Odunga had declared sections 44(1) and (2), 60(1) and (3) and 59(4) of the Tax Procedures Act, 2015, unconstitutional.

However, the Court of Appeal restored Section 60 of the Tax Procedures Act compelling third parties to share information with KRA on demand. This means that firms like Safaricom will share its M-Pesa records with KRA, schools to share fees payment records with the taxman and banks to share clients’ data.

In the appeal against Justice Odunga’s ruling, KRA said the decision had crippled its mandate because the ruling made it possible for evaders to challenge data collected against them. The taxman added that this derailed it from hitting its tax collection targets.

“KRA could not interrogate or question the correctness of tax or duty declaration using third party data further than what had been declared by the taxpayer in the self-declaration form,” Paul Matuku, KRA’s Commissioner for Legal Services said.

He further welcomed the court of appeal ruling saying that a way had been opened for the authority to seek records from third parties, search and seize documents from suspected evaders.

Third parties who fail to provide information to KRA on demand will be liable to a fine of Sh1 million or a jail term of three years or both.

KRA is seeking to match data from the third parties capturing the flow of cash against tax remittances in the race to nab those evading duty payments.

The information sought includes account balances and the flow of income. This enables authorities to check whether taxpayers have correctly declared their income.

The taxman’s intelligence and strategic operations have in recent months been investigating sources of income and expenditure of wealthy individuals and matching it against their tax remittances.

It is estimated that the individuals well as companies evading tax cost the authority KSh 250 billion.

In a bid to bring the suspects to book, the KRA enforcement unit has been using various databases to pursue the evaders.

The information includes bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority (KCCA) and car registration details from NTSA.