Nairobi — The Kenya Revenue Authority (KRA) is seeing an untapped big tax collection base in the informal sector that could see it expand revenue collection.
KRA pledged to address challenges facing the sector in a bid to incentivize and onboard them into the tax net.
KRA Commissioner General Humphrey Wattanga said that the sector, which is estimated to employ about 15 million people, accounting for 83 percent of the country's total labour force, has great tax potential and should be facilitated to uphold compliance.
"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 tap this sector into the tax bracket," added Wattanga.
Wattanga said this during the 2023 Annual Tax Summit in Nairobi.
The Summit, held annually in the month of October, provides a platform for tax experts, policymakers, public servants, technocrats, civil society, private sector actors, and academia, among other stakeholders, to engage on pertinent issues that touch on tax systems.
Participants are drawn from the country and internationally.
KRA announced that it will be working with the National Treasury to establish policies that will simplify, harmonise, and reduce the multiplicity of taxes owed to the informal sector.
Wattanga also said that authority will educate traders to appreciate the need for paying taxes.
The expansion of the tax base comes at a time when KRA is expected to collect Sh2.57 trillion for the financial year 2023-24.
Tax experts and technocrats at the summit reiterated the need to develop policies that will create a certain and predictable tax system.
This, they said, will improve tax morale and subsequently inspire fairness, transparency, 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.
