The Kenya Revenue Authority (KRA) has launched a crackdown on small businesses that fail to comply with tax regulations.
The newly established Department of Micro and Small Taxpayers is leading this effort to boost tax revenue.
The department now targets businesses and individuals earning Ksh200 million and below in turnover.
According to Acting Commissioner George Obell, small businesses generate significant revenue, yet their tax contribution remains minimal.
Small businesses under-declare income
Obell emphasized that while many small businesses have registered as taxpayers, their actual tax remittances remain low.
“If you look at the contribution today, the medium, large, and government entities provide about 86 per cent. Meanwhile, micro and small businesses contribute only 14 per cent,” he stated.
Many small businesses still under-declare income, with some filing nil returns despite active operations.
KRA introduces new measures to track tax evasion
To ensure compliance, KRA has introduced new measures aimed at curbing tax evasion.
The authority is revamping its internal systems for revenue collection, technology, and service to enhance efficiency.
Consequently, businesses must now file more accurate tax returns.
Strengthening the withholding tax system
KRA is analyzing business transaction data to establish tax obligations more effectively.
If a business offers a taxable service, KRA will apply withholding tax.
“For instance, if you provide services to an established business and that service attracts withholding tax, we will withhold and remit,” Obell explained.
Additionally, businesses must declare total income at the end of each tax period.
Tax filing deadline approaching
This crackdown comes as Kenyans continue filing their annual tax returns. The submission deadline is June 30.
KRA urges small businesses to meet tax obligations promptly to avoid penalties and legal action.
