Kiosk owners will be forced to pay taxes after KRA made an announcement yesterday that they will conduct door-to-door inspections to ensure tax compliance.
The move comes as a shock to many traders in the country since KRA will also target small-scale farmers in the village. The traders will be expected to pay taxes based on their turnover, not profits.
KRA said it had sent officials to inspect all businesses in all towns. “KRA wishes to notify the general public that it is carrying out on spot verification of the location of properties and business premises through the block management approach in all towns,” KRA said.
“Those visited during the exercise, particularly property owners and traders, are by this notice required to accord KRA staff the necessary support and provide information as may be called upon.”
The announcement shows KRA’s commitment to reduce the number of businesses which carryout informal operations. Although KRA has not announced the exact penalty or action it will take for those who will not be tax compliant.
Four months ago, a policy directive was issued by National Treasury Cabinet Secretary Henry Rotich providing that everyone should pay taxes irrespective of the sector or size of business. “We must widen the tax net so that everyone eligible to pay tax, including those in the informal sector, does so. In this respect, I have asked KRA to explore ways of taxing the informal sector and to redouble their efforts to net tax evaders,” The National Treasury Cabinet Secretary said.
According to information made available to The Standard, Rotich said that the State would ensure everybody paid taxes. This includes a demand that small-scale farmers cede a portion of their harvest in what is technically known as presumptive taxation. “As part of the review of income tax, we are considering the introduction of a presumptive tax for the hard-to-tax segment of the population, including those in the informal sector,” said Rotich.