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Digitalization enhances tax mobilization and collection

The proliferation of modern technology has been cited as the key factor that has led to the transformation of business environment.

Kenya Revenue Authority (KRA) Commissioner General Mr. Githii Mburu said Covid-19 pandemic has forced people in business to shift to digitalization technology from brick and mortar model in an effort to remain profitable in the current economy.

Mburu said the dynamism injected in the business environment has created a need for tax administration to identify key focus areas for digitalization in the tax administration process for efficiency.

He said digitalization was vital as it provides a perfect opportunity for partnerships between revenue administrations and other government agencies which deal with properties and provision of requisite utilities required by owners.

“The sector in which property taxes fall is one of the fastest growing and robust sectors in most economies. Despite this its contribution to the revenue coffers is still at the minimal, an indication that its full potential is yet to be tapped,” said Mburu.

The Commissioner General was speaking during the official opening of the virtual 6th African Tax Research Network (ATRN) conference themed ‘Maximizing the Revenue Potential of Property Taxes through Digitization’.

Participants of the two-day conference are expected to constitute the basis for technical and policy support for tax administration in Africa, as per the objectives set out in the key transformation blueprint frameworks among them the African Union Agenda 2063, which outlines domestic resource mobilization.

The African Property Tax Initiative established in 2017 by the International Centre for Tax and Development states that property taxes have a great potential to constitute a mainstay revenue stream for African Countries when properly harnessed.

Mburu said the contribution of property taxes to the gross domestic product in developing countries is at an average of 0.38 per cent while that of developed countries is at 2.2 per cent.

The key property taxes in Kenya include capital gains tax and rental income tax.

The Commissioner General announced that the digitalization of the two property taxes through iTax platform has enabled the Authority to enhance administration of the two taxes through improved service delivery and expansion of the tax base.

“Digitalization has enabled KRA to tell who owns what properties for tax purposes at the click of a button,” said Mburu and added that big data is the driver to enhance operational efficiency in tax administration processes in tax mobilization and collection.

By Bernadette Khaduli

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