More deductions as KRA plans to tax paybill, till numbers

The taxman will have access to your mobile money payment termination platforms like Paybill and Till numbers by the end of the year in the latest resolve to have every Kenyan pay his or her fair share of taxes.

The move, aimed at boosting revenue collection across the country, will see till and pay bill accounts converted into electronic tax registers (ETRs).

These platforms, which are cash collection service points synonymous with micro and small enterprises, are managed by telecommunications services, with most of the transactions terminating with the mobile subscriber, in this case, the business owner. 

Some terminate at the subscriber’s bank account of choice, making the transactions visible to the Kenya Revenue Authority (KRA).

Senior advisor to the Council of Economic Affairs in the Office of the President, Moses Kuria, said data shows that out of the 16 million workers in the informal sector, the taxman can collect Sh12 billion. 

This is compared to Sh500 billion, which can be collected from three million workers in the formal sector. “We have decided there will be nowhere to hide,” he said during the culmination of the KRA Tax Summit 2024 in Nairobi on Wednesday. 

Mr Kuria said the government has already proven how it can leverage technology to ensure visibility through the fertiliser subsidy programme that reached 6.4 million farmers and the Inua Jamii cash transfer programme.

He said the government is aware of existing structures in the digital space that would provide this visibility, citing telecommunications service providers as one of them. 

He noted that the attempt by KRA to get visibility through ETR does not have the reach that mobile payment platforms have. “Combined, all our telcos digital touch points we have two million. This is 10 times the ETR we have at KRA,” he said. 

“We have agreed with our (KRA) commissioner general that all these pay bills come Christmas will also be used as virtual ETRs for purposes of KRA.”

The former Trade and Public Service Cabinet Secretary said he is aware that this move will not go well with some businesses. 

He however noted that this is the only way to ensure some of the plans the government has for the economy like reducing the value-added tax work. “When these people come to the tax bracket, probably we will be able to lower income tax for the three million formal workers,” he said. 

He added: “Once we net these people, the proposal of reducing our VAT from 16 per cent to 14 per cent will start becoming a reality.”