The Kenya Revenue Authority (KRA) has netted Sh7.8 billion this year from 97,000 individuals and entities that were not paying taxes previously as the taxman makes modest progress on revenue base expansion to reach hard-to-tax sectors such as MSMEs.
The KRA has credited the new receipts to recent interventions, including the digitisation of services, which have improved how taxes are assessed, collected, and monitored.
The government is backing the KRA tax base expansion to prop up domestic revenue mobilisation against difficulties in adopting aggressive tax measures.
Widespread opposition to tough taxation measures has shifted the responsibility for mobilising higher domestic revenues from the National Treasury and the National Assembly to the KRA.
‘Just looking at this year, from people who have never paid a single shilling in direct tax, by now they have paid Sh7.8 billion,’ said George Obell, the KRA Commissioner, Micro and Small Taxpayers.
‘That is just 97,000 taxpayers who have come on board. They had never paid a single coin, but in four months they have now paid Sh7.8 billion and they have done it voluntarily.’
The KRA has pushed to reach the hard-to-tax economic sectors through changes, mostly to the Tax Procedures Act, amid backlash on the creation of an all-powerful tax czar. The Treasury has empowered the KRA to go after the hard-to-tax sectors amid a trend where most businesses and jobs are being created in the informal sector.
‘The hard-to-tax sectors are characterised by informality, limited record keeping, lack of visibility of transactions by taxpayers in these sectors and inadequate regulation. Most players in these sectors believe that they are not obligated to pay any taxes on self-generated incomes, leading to high levels of non-compliance,’ the Treasury said in its medium-term revenue strategy report.
Proposals contained in the Finance Bill, 2026, seek to further embolden the taxman, including allowing the KRA to issue an assessment on the income of a person relying on third-party data and generation of pre-populated returns based on information available to the agency.
The KRA has cited digital transformation as the key driver for the emerging tax base expansion. ‘Historically, our tax administration model was heavily manual, fragmented and transaction-based. Compliance relied substantially on physical interactions, paperwork and post-transaction audits,’ added Mr Obell.