KRA to Track Mpesa Transactions in Bid to Nab Tax Cheats

Kenya Revenue Authority (KRA) is set to begin monitoring individuals’ Mpesa transactions in a bid to nab tax cheats.

KRA, which is seeking to net 1.9 trillion this year, suspects that some taxpayers who receive their income through mobile money and other online cash transfer platforms such as PesaLink and PayPal have been dodging taxes, The Star reported.

The taxman will match the transactions with the returns made by individual taxpayers to establish whether the figures are consistent.

KRA is also targeting foreign companies that operate digitally in Kenya but have no physical addresses in the country. They include, among others, Facebook, Twitter, Uber, and Amazon.

KRA Commissioners Joseline Ogai and Maurice Orei told The Star that the agency has embarked on data matching in an increasingly digital economy.

The officials indicated that data matching will help the taxman monitor transactions and match with the tax returns of an individual or company.

"We are taking data matching very seriously as our next frontier in digital revenue monitoring. Soon, we will be able to catch tax cheats who make nil or few entries in their tax filings, yet the money they generate online is high," Ogai said.

"You cannot say you file less in returns but the amount of money you handle in your M-Pesa, may be generated from your side hustles, is high and you are not declaring."

"When I pay my mechanic, I use a mobile platform such as M-Pesa as the transaction is quick and informal. So if you look at that person [the mechanic], you may think he has no income yet he has, but informally, and he does not declare," Ogai said.

Commissioner Orei said KRA is working on a plan to appoint tax representatives abroad to assist it with collecting revenues for companies that operate in Kenya but have no physical addresses.

"All the companies even PayPal, Facebook, Twitter and others will now remit their revenues to our representatives in the countries where they are domiciled for onward remittance to us to help the government fund its projects," Orei said.