The Kenya Revenue Authority (KRA) says it is skimming through bank records and transaction details of utility firms with the hope of roping in additional 66,000 landlords into the tax net in the next three years.
The taxman is banking on the third party information gathered on its Data Warehouse and Business Intelligence (DWBI) platform to catch tax-evading property owners.
KRA, which has largely underperformed revenue targets, says the link to third-party systems largely helped it recruit 58,934 real estate owners between July 2015 and June 2018, narrowly missing its target of 60,000 new landlords in the period.
A total of 29,570 property owners were roped into the tax net in the year ended June 2016, surpassing the annual target of 20,000 landlords.
That however fell to 16,978 landlords the following year and 12,386 owners in the year through June 2018, the taxman says, without disclosing the rental income revenue collected in that period.
“Access to third-party data from banks and utility providers was instrumental in identification of the landlords,” the tax collection agency says in a review of its previous three-year corporate plan for the period ended June 2018.
Investors with rental income between Sh144,000 and Sh10 million per annum are required to complete a monthly tax return declaring the gross rent from which tax payable is computed at the rate of 10 percent.
The KRA’s DWBI platform has capability to plug into third-party systems such as bank accounts, merchant accounts such as Safaricom’s Lipa Na M-Pesa till and paybill numbers as well as transactions with utilities such as Kenya Power and Nairobi Water and Sewerage Company.
The iTax, the online tax filing system, is also linked to bank accounts opened under Integrated Financial Management Information System (IFMIS), among other systems used by businesses to cut trade deals.
This allows the taxman to access the profile of a taxpayer through a single platform, enabling it to track compliance.
Legislators voted to approve Treasury secretary Henry Rotich’s amendment to the Tax Procedures Act 2015 through the Finance Bill 2016, enabling the KRA to access electronic data on taxpayers without seeking a court order.
The Central Bank of Kenya also requires banks and other financial services providers to Personal Identification Number (PIN) certificate of new clients as part of Know Your Customer (KYC) checklist.
The taxman has overall set a target of expanding the tax base by 3.06 million taxpayers by June 2021 from 3.94 million in June 2018 by spying on homes and businesses using technology to flash out cheats.
Over that period, it targets to grow core revenue — which include Railway Development Levy and Road Maintenance Levy — to Sh1.997 trillion in the year starting July and Sh2.298 trillion in June 2021 from Sh1.61 trillion targeted in the current year ending in June.