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New un-harmonized tax policies pile pressure on KRA revenue goals.

The recent tax policies designed by the National Treasury have created an animosity between the Kenya Revenue Authority (KRA) and taxpayers mainly due to the interpretation of tax clauses with the latest victims being betting firms. These new policies are usually introduced during the start of every financial year even as treasury continuously comes under pressure to cut on national debt and increase revenue.

In the middle of the betting firms and the taxman dispute is withholding tax arrears of shs. 61 billion whereby each has a different interpretation of “tax on winnings”. The situation paints a grim picture of the consultations between KRA and taxpayers in successfully understanding newly introduced tax policies. During the release of its revenue performance report of the financial year 2018-19, KRA indicated that tax policies introduced the previous year raised shs. 48.2 million a margin short of the predicted and anticipated shs. 62.9 million.

The taxman blamed the above mentioned shortfall of shs. 14.7 million equivalent to 23% of total revenue target on the standoff with betting firms which has prompted the suspension of the operating licenses and payment platforms of 27 of the companies. In their report, KRA categorically stated this as the principal cause of the under-collection.

Not only is the gaming and betting industry affected by these conflict but also beyond while pressure piles on the state agency mandated to collect revenue to meet the ever growing revenue collection targets. Many companies have gone to court seeking to oppose new tax measures and seek redress while also claiming compensation due to the inconveniences caused to their respective businesses.

Some firms have successfully challenged these tax measures which end up to become a big blow to KRA whilst decrying lost business. Ernst & Young, an audit and advisory firm went vocal on the government’s tax measures for the current financial year 2019/2020 and proclaimed doom of inability of the government to raise 50% of the expected shs. 37 billion.

Stay ahead on audit, tax and financial advisory by following our blog and engaging our dynamic team to save your business from unnecessary penalties by the state agency.

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