The Kenya Revenue Authority has announced that it is launching a crackdown on traders who have been changing their paybills and till numbers to avoid paying taxes. This has been announced by the Acting Commissioner-General Lilian Nyawanda.
According to Ms Nyawanda, the taxman has noticed a pattern in which traders in the micro small and medium enterprises categories have been switching to different paybills and till numbers. This has been enabling them to avoid leaving a trail of financial transactions for KRA to track.
“It is very easy to see the transactions. If you are a trader, there is what you purchase and there is what you sell. Your transactions will somehow be captured somewhere. Even if you change paybills and till numbers, somehow they will be captured because you will be trading with someone,” she said.
The authority will be relying on electronic tax invoices popularly known as eTIMS. With these receipts, businesses supplied with goods and services are required to declare payments made to their suppliers using paybills and tills.
READ MORE: KRA drops taxpayers from the infamous ‘Special Table’
According to Ms Nyawanda, the KRA has been using its systems to match transactions across counterparties [the sender and the receiver]. This has in turn been creating dual records that the taxman has been using to track parties who fail to declare their income despite appearing in the records of either sender or receiver.
“A transaction is not completed by one party. It has two parties. One party may file and another may not. So there is a way we can track from our system,” she said.
She added that the revenue authority has already started sending targeted messages to traders who have been flagged. The messages state that their transactions have been detected and that they are required to regularize their tax statuses.
KRA has been requiring traders with annual turnover of over Sh5 million to issue eTIMS invoices. Where goods are acquired from a small trader who has an annual turnover of less than Sh5 million, KRA requires the buyer to generate a buyer-initiated invoice. This is done through KRA’s eCitizen platform.
The taxman is using this two way traffic between buyer and seller to ensure that the transaction is captured on either both on one end with details of both the seller and the buyer for taxa purposes.
