KRA summit a bedrock of ideas on tax administration
Since time immemorial and in many jurisdictions, taxation has been perceived as a hard nut to crack. In light of this, a top global agenda on tax administration has been an exploration of possible avenues to simplify tax processes to the simplest level possible.
Many scholarly findings unanimously posit that one of the most important outcomes of a simplified tax system is improved tax compliance. In his article titled Tax Simplification: Issues and Options (2001), William Gale notes that successful simplification of the tax processes have numerous benefits. The most fundamental are reduced cost of compliance in terms of time, money, and mental anguish.
The discussion on simplification of the tax processes is alive in Kenya. The Kenya Revenue Authority (KRA) in conjunction with various economic and tax administration think-tanks have been on the frontline cracking the brain on the best way to simplify tax administration in the country.
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One of the platforms that KRA uses to engage scholars and members of the public on tax matters is the annual tax summit. The forum, now in its fifth year, has provided a perfect opportunity for fruitful engagements that inform important policy decisions on tax administration.
This year’s summit is anchored on the theme “tax simplification and digitisation for economic transformation”. The theme resonates well with the global agenda mentioned earlier on simplification of the tax administration process. The theme also aligns to the contemporary mass digitisation of processes.
However, there has been a two-sided coin of perception when it comes to automation of the tax processes. On the one hand, it is viewed as a crucial step towards conforming to the contemporary digital era. Digitising the tax processes enhances efficiency in tax administration.
Flashback to some years back when tax administration was largely manual and it would take inordinately long time to have crucial services delivered. For instance, before implementation of iTax, taxpayers had to visit KRA offices in person to apply for compliance certificate, a process one can now initiate from the comfort of their house or office.
Prior to iTax, submission of tax returns, especially the annual income tax returns, was a formidable nightmare, thanks to the long and meandering queues that marked the deadline. iTax has now put an end to this phenomenon.
On the other hand, though not totally against digitisation of tax administration, some schools of thought see it as an obstacle to tax compliance, especially in countries with low uptake of ICT. This begs the question: do we maintain the manual tax administration and lag behind in efficiency, or should we digitise the system in a simplified manner for enhanced efficiency?
The annual Tax Summit has for the fifth year now provided the perfect ground for such conversations affecting tax administration.
This year’s tax summit, just like previous tax summits, provides an opportunity for members of the public and scholars at large to air their views on various tax policies and reforms with a view to make them suitable for administration in our jurisdiction.
In other words, the two-day annual tax summit be to held at the KICC on 16th and 17th October promotes the spirit of public participation on tax matters. It brings together local and international tax and economic affairs experts. It’s worth noting that resolutions reached at summit play a key role in informing KRA’s next course of action in improvement of tax administration. During the 4th Annual Tax Summit held last year, for instance, a key resolution was a need for KRA to institutionalise engagements with the informal sector.
Though contributing significantly to the Gross Domestic Product, it has been a tough task to bring the informal sector into the tax net. As a result, KRA has been organized a series of tax seminars and sensitizations with the sector to better understand it. From the engagements, KRA has learnt that majority of the sector players are willing to be tax compliant. All they require is facilitation and information on how to do so.
The importance of the tax summit, therefore, cannot be gainsaid.
—The writer is the head of marketing and communication, KRA
