A modern tax framework should make tax systems, processes, methods and laws more convenient to all taxpayers. In the 21st century, modernisation through IT platforms has reduced the number of inconveniences faced by taxpayers in the past.
Modernisation of the tax laws and systems in Kenya has been an ongoing process since 2003, mainly steered by the government and implemented by the Kenya Revenue Authority (KRA). During this time, we have seen an increased level of participation in law making through the engagement of the public and professional bodies in this process.
Parliamentary committees and the national Treasury have been keen to invite the KRA, Institute of Certified Public Accountants of Kenya, Kenya Association of Manufacturers, among other stakeholders, to express their opinions on proposed laws, with an aim of making improvements to them before tabling legislation before the National Assembly for enactment. It is through such forums that the KRA embraces thought leadership processes, such as the taxation of permanent establishment as guided by the OECD guidelines, base erosion of profits and transfer pricing, which are perfect cases of advancement in the taxation process.
The launching of the online iTax system by the KRA has greatly reduced the barriers of tax administration in Kenya. Tax payers are given access to the system at their own convenience, be it on their hand-held devices or a personal computer while anywhere in the world, as long as they have access to the internet.
A tax system’s success can be evaluated by analysing the legal redress process available to taxpayers in the event of a dispute. The government of Kenya has appreciated this fact and instituted the Tax Appeals Tribunal as a legal redress and appellate organ of the tax laws, where aggrieved taxpayers can present their cases for adjudication. The recently constituted Tax Appeals Tribunal replaced the previous Local Committee, Customs Appeals Tribunal and the VAT Tribunal, which previously made the tax appeals process cumbersome as the taxpayer had to file separate appeal documents under each for corporate tax, Customs and excise duty and valueadded tax, respectively.
The members of the Tax Appeals Tribunal have been reconstituted to include professionals and industry experts who will assist in the arbitration process through the determination of tax appeals. KRA officers and public servants cannot be appointed to the tribunal. In the dispute resolution process, the tax regime has also integrated alternative dispute resolution programmes, where both parties to the dispute can opt to settle the matter out of court. Furthermore, the KRA has rolled out sensitisation and training programmes across the country. Through these forums taxpayers learn the system better, ensuring a higher level of compliance.
Souble-tax agreements and tax information exchange agreements, have helped to develop a higher level of awareness and information exchange between tax authorities. The KRA has also entered into a memorandum of understanding with other revenue authorities to share information with an aim of ensuring a high level of compliance.
In the process of modernisation, a good tax law system is only as good as the people implementing it. The KRA has segmented taxpayers into groups, allowing it to cater for each groups’ unique needs.
With all these efforts directed at making taxation more convenient, Kenya is headed in the right direction notwithstanding the occasional hurdles encountered. In making this happen, the KRA has incorporated departments within the tax administration process that serve different categories of taxpayers.