The Kenya Revenue Authority (KRA) is intensifying efforts to curb tax evasion, with a particular focus on micro and small-scale businesses. The agency’s acting commissioner for micro and small taxpayers, George Obell, has announced a series of measures aimed at ensuring compliance among this segment, which has been identified as a major contributor to tax leakage.
Speaking in an interview, Obell highlighted the large gap in tax compliance within the informal sector. He revealed that out of the 20 to 21 million Personal Identification Number (PIN) holders in the country, a significant portion comprises small and micro-business owners who have not been consistently filing their tax returns. Many of them, despite being operational, continue to file nil returns, which affects revenue collection.
To address this issue, KRA plans to establish a dedicated team to monitor and enforce tax compliance among small businesses. The agency will deploy more strategies to track financial transactions within the informal sector and ensure accurate declaration of revenues. This initiative is expected to increase tax collection and create a fairer taxation system for all businesses.
Obell also emphasized the role of data analytics in identifying non-compliant taxpayers. By leveraging information on asset ownership, including land and motor vehicles, KRA aims to bridge the existing gap in tax collection. The agency will track transactions at various levels to detect discrepancies and take necessary action against defaulters.
The commissioner expressed optimism that these efforts will significantly improve the contribution of micro and small businesses to domestic tax revenue. Currently, medium, large, and government entities contribute about 86% of total domestic taxes, while micro and small enterprises account for only 14%. By enhancing compliance in this sector, KRA hopes to increase overall tax revenue and reduce reliance on a few major taxpayers.
As the crackdown intensifies, small business owners are encouraged to meet their tax obligations to avoid penalties and ensure smooth business operations. KRA remains committed to fostering a tax-compliant culture and strengthening the country’s economic growth through fair and efficient tax collection practices.
