The Kenya Revenue Authority (KRA) has identified 392,162 tax-evading firms, businesses, and wealthy individuals who owe approximately KSh759.7 billion in unpaid taxes, following a recent withholding tax audit.

This crackdown is part of KRA’s efforts to widen its tax base and recover lost revenue.

According to data from the withholding tax registry, the self-declared income by these individuals and businesses was significantly lower than the amounts reported by third parties paying for their services.

In some cases, the listed tax-evaders declared nil returns despite receiving payments from firms they did business with.

KRA detectives have launched a crackdown to recover the unpaid taxes, and those who fail to comply may face severe penalties, including:

• Asset Freezes: Freezing of assets to recover owed taxes
• Travel Bans: Restrictions on travel until tax obligations are met
• KRA Pin Deactivation: Deactivation of KRA PINs, halting business operations

The authority has been using various databases to track suspected tax cheats, including bank statements, import records, and motor vehicle registration details. This move aims to boost revenue collection and promote tax compliance among Kenyans

The Kenya Revenue Authority (KRA) is employing several strategies to tackle tax evasion, including:

• Data-driven approach: KRA is using various databases, such as bank statements, import records, and motor vehicle registration details, to identify tax evaders.
• Withholding tax audit: KRA conducted a withholding tax audit, which revealed that 392,162 firms and individuals had underdeclared their income, resulting in KSh759.7 billion in unpaid taxes.
• Collaboration with other agencies: KRA is working with other government agencies to share information and ensure accurate taxpayer profiling.
• Digital tools: KRA is deploying digital tools, such as the Electronic Tax Invoice Management System (eTIMS), to foster real-time compliance and secure revenue flows.
• Increased staffing and resources: KRA has received an additional KSh10 billion budget allocation to boost its efforts, including hiring more staff and acquiring equipment .

The impact of KRA’s crackdown is expected to be significant, with the authority aiming to increase tax collection by 17% to Sh2.57 trillion in the current fiscal year.