Businesses in the country have started ditching mobile payment methods such as paybills and Lipa na M-Pesa in favour of cash payments.
This is the latest maneuver that is aimed at avoiding taxation measures from the Kenya Revenue Authority and the government which are widely being considered as punitive.
The Kenya Revenue Authority says that it has noted the widespread move by businesses, particularly in the small and medium enterprises category to ditch Lipa na M-Pesa and paybills in preference for cash payments.
“It is already noted that businesses ditching Lipa Na M-Pesa is what is happening in the market. We are working on strategies on how we can work around this,” said Caroline Rotich who is the KRA’s chief manager in the Domestic Taxes Department.
The KRA now says that it will ask Safaricom for a list of businesses that have stopped using Lipa na M-Pesa in a bid to smoke them out.
“Working together with Safaricom to facilitate with integration, we will get information on these drop-outs so that from there we can do follow-ups and compliance checks,” Rotich said.
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“We have several officers now who are doing compliance checks around the main towns. This will help us address this issue.”
The move by small businesses to ditch Lipa na M-Pesa comes after the government slapped them with tougher taxes.
Small businesses with annual sales revenues of between Sh. 1 million and Sh. 25 million are now required to pay a turnover tax at the rate of 3 per cent of their gross annual sales.
This was an increase from the previous requirement of 1 per cent that was previously charged on gross sales of between Sh. 1 million and Sh. 50 million.
In ditching the mobile payment methods, small businesses have attributed their moves to charges that are slapped on the transactions.
“Dear esteemed customers. Due to the increased cost of transacting via mobiles and banks, we will not be using paybill or buy goods as from 1st october 2023. Kindly pay cash or withdraw. We sincerely apologize for any inconvenience. We appreciate your trust and loyalty and are committed to your satisfaction,” one business advised its clients.
