(Ecofin Agency) - Since 2021, many African countries have devised new means to generate financial resources to fund economic recovery. One of those means is broadening the tax base, with interest focused on specific sectors due to their dynamism.
The Kenya Revenue Authority (KRA) recently announced a plan to set up a system to better assess voice, Internet, and SMS traffic. The public administration, which questions the daily revenues declared by telecom operators, wants to use that system to combat fraud and improve its collection.
"We do not want to rely on the information given to us by the telcos. We want to go in there and see for ourselves so that the deduction can be done on a daily basis. […] We have already deployed the technology in the betting sector and we have witnessed massive gains. We expect this to happen in the telcos as well," said Githii Mburu (photo), the KRA Commissioner General, during the international customs day last Thursday.
The move is part of the Kenyan government's plan for economic recovery during the 2023/2024 fiscal year. The plan aims to raise around Ksh3 trillion (US$24.1 million) in revenue and possibly as much as Ksh4 trillion. These ambitious fiscal projections, to which telecoms are expected to contribute, are contained in the draft 2023 budget policy statement, which was submitted for government review on January 24, 2023. According to Githii Mburu, the collection of taxes normally due from telecom operators will enable the KRA to obtain sufficient revenue to "ease the burden on government borrowing".
Reacting to Githii Mburu's announcement, Safaricom's CEO Peter Ndegwa explained that if the move is approved by law, telecom operators would comply. "We have heard about the new draft proposals, which the KRA Commissioner General has spoken about...they’re still at the proposal stage, I’m sure we’ll be engaged as a critical stakeholder in this proposal. Of course we’ll always follow the law, if KRA has right to do certain things and are approved in the normal way through Parliament, I’m sure we’ll follow the law as we have always done,” he said.