KRA’s Dynamic Move: Real-Time Surveillance on Mobile Money Transactions for Enhanced Tax Compliance
The Kenya Revenue Authority (KRA) has embarked on a groundbreaking initiative to closely monitor transactions within mobile merchant accounts, including the widely-used Lipa Na M-Pesa platform by Safaricom. Drawing inspiration from a successful collaboration with betting companies to uncover tax evaders, the KRA is establishing a real-time linkage with telecommunications companies. This strategic maneuver aims to achieve increased transparency in the trillions of shillings flowing annually through these networks and to uncover discrepancies in tax declarations among telcos and traders.
According to informed sources, the KRA is taking the necessary steps to seamlessly integrate its systems at the Times Towers with those of telecommunications providers. This integrated approach will empower the KRA with continuous visibility over transactions, enabling swift actions against tax evasion and ensuring compliance with President William Ruto’s directive to collect every due shilling.
The KRA has assembled a dedicated team to draft the technical aspects of this integration, ensuring a seamless connection between the tax authority’s infrastructure and the telecommunications systems. The goal of this pioneering collaboration is to equip the KRA with real-time insights into transactions, facilitating prompt taxation and supporting revenue generation strategies.
Notably, this move holds immense potential for identifying traders who have historically under-declared taxes despite substantial profits derived from mobile money platforms. Sources close to the development emphasize that the KRA’s analysis will target discrepancies in merchant digital account transactions, particularly focusing on Safaricom’s Lipa na M-Pesa Pay Bill and Till wallets. By analyzing these transactions, the KRA aims to reconcile taxes remitted based on declared sales, thereby ensuring proper taxation.
The KRA’s strategic endeavor is fortified by concerns that some telecom companies might be undervaluing transactions, leading to underreported charges on services such as airtime, Internet, and money transfers. The integration will help uncover these disparities and promote accurate tax assessments. Recent data from the Central Bank of Kenya highlights the significant value of mobile money transactions, illustrating the need for precise taxation that aligns with transaction values.
Telecom operators are substantial contributors to the nation’s revenue, with Safaricom consistently leading the list of major taxpayers. The telecommunications sector remains a key source of revenue for the government, especially through taxes on airtime, data bundles, and money transfer services.
The KRA’s proactive approach in integrating with telecommunications providers echoes the successful interlinkage with betting companies, resulting in significant increases in excise duty and withholding tax revenues. By adopting similar strategies, the KRA is positioning itself to adapt to evolving industries and stay vigilant against tax evasion practices. This innovation aligns with the KRA’s mission to achieve full integration with internal and external systems, marking a decisive step towards harnessing Kenya’s revenue potential for national development.