KENYA: KRA to access M-Pesa, bank accounts to nab tax cheats

Taxman’s proposed bid to access bank and mobile money accounts to nab tax evaders continues to win praise from tax experts amid concerns over violation of right to privacy.

Consultants at audit and business advisory firm Grant Thornton yesterday joined the chorus, arguing the move will help the Kenya Revenue Authority get more accurate income data on taxpayers. The plan was also backed by PricewaterhouseCoopers last week.

“During (tax) audits the first thing they ask for is a bank statement, but there are people who have devised ways of having more than one account where they hide the income they don’t want to declare, to a different bank account,” Grant Thornton’s director for tax Samuel Mwaura said yesterday. “It will be a perfect move for KRA to try to improve or net more taxpayers into their bracket if it is implemented.”

KRA has been developing Data Warehouse and Business Intelligence system at an estimated cost of Sh765 million to help link taxpayers data in the iTax, its electronic tax filing platform, to bank accounts and mobile money wallets.

The proposal – set to be included in the Finance Bill 2016 – will however require some amendments to existing banking laws, which include Banking Act and the Microfinance Act 2006.

The tax agency, Mwaura said, may need to lobby and sensitise Members of Parliament and civil organisations on the merits of the proposed access to bank and mobile money accounts.

“They might face challenges right from the MPs who might not want their privacy to be known because most of them are also in business,” he said. “Some people or organisations might also go to court and say it’s all about privacy and that KRA should get that information directly from them and not through third parties.”

Safaricom which operates the largest mobile money transfer service M-Pesa, said in a media report last week, it is yet to be contacted by the tax agency on the proposed plans. The report, however, said Safaricom CEO Bob Collymore had hinted that the move would be counter-productive.

The KRA has largely struggled to meet the ambitious targets set by the National Treasury over the years amid double-digit growth in annual budget estimates. The taxman netted Sh974.50 billion between July and April this year – a growth of Sh105.4 billion over the same period in 2014 – against Sh1.215 trillion full-year projection to June 30.

“The level of compliance is still very low at 50 per cent,” Mwaura said. “People may just be refusing because they think they will never be caught but if they (KRA) can increase complaince to 75 per cent, we will not rely heavily on borrowing.”

In 2013-14 the KRA surpassed target by Sh100 million to Sh963.8 billion.