KRA deploys system to monitor M-Pesa transactions to net tax cheats
3 min read
KRA to mine data from mobile telco accounts such as Safaricom’s Lipa Na M-Pesa in a bid to catch tax evaders
KRA to mine data from mobile telco accounts such as Safaricom’s Lipa Na M-Pesa in a bid to catch tax evaders.
After connecting its platform with those of telecoms, the Kenya Revenue Authority (KRA) would monitor transactions on mobile merchant accounts, such Safaricom’s Lipa Na M-Pesa, in real-time, emulating the results of a similar integration with betting businesses in detecting tax evaders.
In order to catch telecoms and traders who under-declare taxes, Taxman has already taken the first steps toward having a 24/7 picture of the billions of shillings traded annually on the telecommunications infrastructure.
The taxman claims to have formed a dedicated team to develop guidelines for linking its systems with telcos’ systems.
The planned linkage will enable the KRA to have real-time visibility of transactions for taxation purposes in in line with President Ruto’s directive to “collect every shilling due”.
“The process is in the initial stages of piloting,” David Mwangi, the acting commissioner for the domestic taxes department, said.
“The integration with telcos is aimed at enhancing the visibility of real-time transactions and, as a result, provide daily trends upon which compliance measures can be taken to enhance revenue collection.”
But the biggest catch will be traders who have for years under-declared taxes despite making a fortune using mobile money platforms.
Sources revealed that KRA will process the data with a view of netting traders whose transactions on merchant digital accounts such as Safaricom’s Lipa na M-Pesa Pay Bill and Till wallets do not reflect the taxes they remit based on the sales they declare.
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“The integration will enable us to have a full scope of all those transactions on digital accounts and, obviously, we expect increased collections based on analysis of those transactions,” the KRA official, who did not want to be identified, said.
KRA believes some telecom companies undervalue transactions on their networks, resulting in the declaration of lower charges on the sale of airtime and Internet as well as fees for sending and receiving money upon which taxes are computed.
The latest Central Bank of Kenya data, for example, put the value of cash handled by mobile money agents at Sh7.811 trillion for the year ended June, a 4.97 percent growth over Sh7.441 trillion in the prior year.
Once implemented, telecoms will replace self-declarations as the basis for tax calculations and join the betting and other industries where the KRA has 24/7 access to their transactions.
For years, the taxman has kept a close eye on the operations of producers of alcohol and cigarettes, for example.
Such businesses are forced to install internet protocol (IP) cameras in their production lines, which are equipped with infrared night vision, a 360-degree rotating view, and the ability to communicate real-time data to KRA.
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