The Kenya Revenue Authority (KRA) is setting up a mobile payment module for the collection of turnover tax. This is part of an initiative to facilitate the payment of the reinstated tax. The revenue authority reinstated turnover tax in January 1, 2020, requiring small businesses to pay a 3% tax on gross sales. However, the tax only applies to small businesses with annual sales below KSh 5 million.
Mobile payments present an indisposable option for the taxman, if the agency is to realize its turnover tax revenue targets. According to Standard, the authority has less than 6 months to raise KSh 25 billion in the tax. A tax expert at KRA revealed that there are plans to include an additional 520,000 businesses into the turnover tax base.
The turnover tax is an initiative by the agency to widen its tax base and improve efficiency in tax collection. However, it is neither a new or additional levy. KRA introduced turnover tax in 2008, requiring businesses to pay a 3% tax on gross annual sales. Unlike this year, businesses then remitted a quarterly return instead of a monthly return. However, the tax failed to bear fruits and was therefore scrapped off.
KRA made attempts to reinstate the tax in 2012, charging business owners 5%, to no avail. This is the third attempt at establishing a turnover tax in Kenya.