Why KRA has changed tack in revenue collections

The Kenya Revenue Authority (KRA), long criticised for aggressive tax collection by business owners and individuals, says it has changed course. The agency dedicated to micro and small businesses says it has rolled out tech initiatives targeting Value Added Tax (VAT), a historically underperforming tax head.

The results, it says, are paying off, with VAT from micro and small taxpayers growing 25 per cent cumulatively from July to April.

In April, the department collected Sh7.71 billion, beating its target by Sh383 million, a 30.5 per cent year-on-year jump. Yet many businesses still see KRA as an enforcer, not a partner, with inflation at a two-year high and the economy slowing.

In an emailed interview, our senior reporter Brian Ngugi spoke to KRA Commissioner for the Micro and Small Taxpayers Department George Obell. Mr Obell took over the docket on November 10, 2025. He explains the taxman’s new approach. Below are excerpts. 

KRA often describes itself as a “partner in prosperity” focused on voluntary compliance. Yet many businesses see KRA as an enforcer first and an enabler second, especially during economic hardship. How are you repositioning KRA to walk with taxpayers in a slowing economy, rather than just chasing revenue at all costs?

KRA’s position today is that revenue growth and business growth are complementary rather than conflicting objectives. Under the current transformation agenda, the Authority has deliberately shifted from a predominantly enforcement-driven institution to a facilitative compliance model focused on taxpayer support, simplification, and engagement.

We have consistently emphasised that KRA’s objective is to “connect, support and ensure seamless compliance while creating a conducive environment for doing business”.

This shift is reflected in several practical initiatives, including USSD tax services (*222#), WhatsApp-assisted filing, automated payment plans, eTIMS mobile solutions, and pre-filled returns designed to ease compliance, particularly for MSMEs and informal sector traders.

In addition, KRA has strengthened direct engagement with taxpayers through county-based Citizen Assembly forums held across the country, including Nairobi, Eldoret, Mombasa, Meru, Kakamega, Kisii, and Homa Bay.

These forums provide taxpayers with an opportunity to raise concerns, provide feedback, and contribute to implementation improvements. Such initiatives demonstrate KRA’s recognition that sustainable revenue collection depends on building trust, broadening the tax base fairly, and supporting businesses through challenging economic conditions.

KRA also acknowledges the realities of a slowing economy and recognises that placing additional pressure on already compliant businesses can be counterproductive.

Consequently, the Authority’s strategy increasingly focuses on equity, spreading the tax burden across all potential taxpayers through sealing revenue leakages, enhancing transparency using digitisation, and bringing previously untaxed economic activity into the formal tax system rather than overburdening compliant taxpayers.

What concrete, measurable changes have you made to make KRA genuinely taxpayer-friendly?

We’re talking faster dispute resolution, payment plans that aren’t punitive, and human-to-human engagement rather than automated threats. Where are the results?

KRA has implemented several reforms aimed at improving the taxpayer experience and reducing compliance burdens.

A key milestone has been the establishment of the Micro and Small Taxpayers Department, which has facilitated the onboarding of over 511,000 taxpayers through collaboration with counties, trade associations, and trained agents to support compliance physically on the ground.

The Authority has also adopted more structured and flexible payment arrangements to ease cash flow pressures faced by small businesses. These include daily and flexible payment options designed to accommodate traders operating on thin margins.

In addition, technology upgrades to the iTax platform and automation of internal workflows are expected to improve turnaround times for refunds, filing, and validations while reducing manual bottlenecks.

Importantly, KRA has enhanced data integration to support pre-filled taxpayer returns, thereby reducing repetitive manual submissions and lowering overall compliance costs. The broader objective is not simply to increase collections, but to make compliance easier, faster, and more predictable for taxpayers.

The Finance Bill 2026 gives the Commissioner powers to originate assessments without a taxpayer trigger and to issue agency notices during pending appeals, powers KRA itself lobbied for. In what universe is that consistent with a “friendly” tax agency? 

The proposals contained in the Finance Bill 2026 must be viewed within the context of a rapidly digitising economy, where traditional self-declaration models are now robustly supported with the use of data for compliance and pre-filing of returns. KRA’s position is that the proposed powers are intended to address sophisticated tax evasion, undeclared income, and artificial arrangements designed to avoid tax obligations.

The reforms are also consistent with international trends, where tax administrations increasingly rely on third-party data, electronic invoicing, and digital verification to enhance fairness and accountability within tax systems. At the same time, KRA acknowledges that enforcement powers must be balanced with taxpayer protections, transparency safeguards, and effective dispute-resolution mechanisms.

The Authority further notes that the Finance Bill proposals remain subject to parliamentary scrutiny and public participation before enactment. The broader point is that a “friendly” tax administration does not mean the absence of enforcement.

It means predictable, fair, transparent and proportionate administration of the law. Voluntary compliance works best when compliant taxpayers are protected from unfair competition by those who deliberately evade taxes.

You’ve launched USSD services, chatbots, and automated payment plans. But are these tools truly accessible to the average small trader or farmer, or do they simply make it easier for KRA to track and penalise them faster?

The intention behind USSD, chatbots and digital services is inclusion and simplification, especially for small traders who may not have accountants or sophisticated systems.

The Authority deliberately chose channels already widely used by ordinary Kenyans. WhatsApp, USSD and mobile-based filing platforms are meant to lower barriers to compliance for informal traders, rural businesses and first-time taxpayers.

KRA further acknowledges that many SMEs struggle not because they are unwilling to comply, but because tax processes historically appeared complicated and inaccessible. The digital reforms, therefore, aim to reduce paperwork, reduce travel costs, shorten filing times and automate repetitive processes.

At the same time, digitisation inevitably improves visibility of commercial transactions. KRA employs the use of technology to reduce leakages and create a level playing field. But the focus remains commercial activity, not personal financial surveillance. KRA has publicly clarified multiple times that peer-to-peer personal M-Pesa transfers are not being targeted.

KRA has been sending personalised tax-demand messages, with deadlines like April 30, 2026, threatening penalties and interest. Many taxpayers received these emails with little explanation of how the arrears were calculated. Why should taxpayers trust automated assessments when they can’t easily verify the figures?

KRA acknowledges that automated assessments and personalised notices can create anxiety if not accompanied by adequate explanation. That is precisely why the Authority has increasingly emphasised taxpayer engagement. clarifications and self-review opportunities before escalation.

The notices being issued are largely based on discrepancies identified through third-party data, eTIMS records, withholding submissions and transaction matching. The channels have feedback tools for taxpayers to engage with KRA on the amounts and seek any further clarifications.

The intention is not to punish taxpayers unfairly but to encourage early correction and voluntary regularisation before penalties escalate further – in these cases, taxpayers are provided with available KRA data to help them to file their tax obligations correctly.

Importantly, taxpayers are not without recourse. Kenyan tax law provides objection and appeal mechanisms where a taxpayer disagrees with an assessment.

 KRA’s systems are designed to flag inconsistencies, but taxpayers still retain the right to provide explanations, supporting documentation and corrections. KRA also recognises that technology is not infallible. That is why the Authority continues refining system integrations and taxpayer support channels to improve data accuracy and resolve mismatches more efficiently.

Is KRA’s email strategy about education and support, or is it a mass-surveillance collection drive designed to intimidate low-level earners who may not even understand what they owe? And what happens when KRA’s own system makes an error? Who bears the cost of the panic and penalties?

KRA rejects the characterisation of its strategy as “mass surveillance”. The Authority has consistently clarified that it is targeting commercial transactions linked to business activity, particularly through paybill and till numbers, not ordinary personal transfers between individuals. The larger objective is equity and tax fairness.

For years, compliant taxpayers have complained about unfair competition from businesses operating outside the tax net despite significant commercial activity. Digital verification tools are intended to address that imbalance.

Where errors occur, taxpayers have legal rights to dispute assessments and seek review. KRA also continues strengthening customer support channels to resolve disputes more quickly and transparently. The Authority recognises that public trust depends not only on enforcement effectiveness, but also on accountability, responsiveness and fairness in correcting mistakes.

You’ve integrated iCMS and iTax to automatically pre-fill export data and validate income against eTIMS invoices. That sounds efficient in theory, but in practice, mismatches have led to default assessments. What recourse does a taxpayer have when the system wrongly accuses them of under-declaration?

KRA recognises that data mismatches can occur in any large-scale digital integration environment. For this reason, taxpayers continue to enjoy statutory objection rights and are allowed to provide supporting documentation where discrepancies arise.

Automated systems are meant to identify risk indicators and inconsistencies, not to eliminate due process. The integration of iCMS, iTax and eTIMS is intended to reduce fraud, eliminate duplicate reporting and simplify filing by creating a single source of truth for transactions. At the same time, KRA appreciates concerns raised by taxpayers and practitioners regarding the transparency of assessments.

The ongoing taxpayer forums and stakeholder consultations are partly aimed at improving communication around how assessments are generated and how disputes can be resolved quickly. The long-term objective is a smarter, more predictable and less intrusive tax system where compliant taxpayers spend less time dealing with audits and manual reconciliations.

Kenya’s GDP growth slowed to 4.6 per cent in 2025 – below the EAC average of 5.6 per cent and the slowest since 2020. Inflation is at a two-year high, and businesses are collapsing. In this climate, is aggressive revenue collection sustainable, or is KRA strangling the very businesses that will drive recovery?

KRA acknowledges the economic challenges currently facing businesses and households, including slower GDP growth and increased operational pressures. The Authority recognises that it does not operate in isolation from the broader economic environment. At the same time, revenue collection remains essential for financing public services, infrastructure, healthcare, education, and debt obligations.

The challenge, therefore, is not whether revenue should be collected, but how it can be collected in a manner that supports economic recovery and fairness.

Consequently, KRA’s strategy increasingly focuses on broadening the tax base, digitising compliance, and reducing revenue leakages instead of relying solely on increased pressure on already compliant taxpayers.

The Authority further believes that improving efficiency, transparency, and voluntary compliance offers a more sustainable long-term approach than aggressive manual enforcement. KRA also argues that digitisation can lower compliance costs for businesses by simplifying filing processes, reducing paperwork, and minimising the need for physical visits to tax offices. 

The government is raising taxes through the Finance Bill 2026, while KRA is pursuing arrears with unprecedented intensity. Are you worried that you’re pushing small and medium enterprises into closure rather than compliance? 

KRA recognises the critical role played by SMEs in Kenya’s economy and acknowledges concerns that intensified revenue collection efforts may place additional strain on small businesses.

However, the Authority maintains that its objective is not to push businesses into closure but to create a fair and sustainable compliance environment where all participants contribute equitably. I have consistently emphasised supportive engagement, rather than punitive enforcement, as the preferred approach for MSMEs. 

 KRA further argues that Kenya’s tax burden becomes unsustainable when large portions of economic activity remain outside the tax system, while a relatively small number of compliant businesses shoulder disproportionate responsibility.

As a result, KRA’s reforms are aimed at widening participation, simplifying compliance, and gradually formalising economic activity. The Authority also continues offering payment arrangements, taxpayer education initiatives, and simplified digital tools specifically designed to support smaller businesses.

Taxpayers who are unable to meet their tax obligations are encouraged to apply for flexible payment plans that fit their situations.