Proposed Bill – KRA to access M-Pesa, bank accounts

The tax authority will gain unrestricted access to your M-Pesa and bank accounts as part of a new strategy to uncover tax evasion, according to a report by the Star.

This initiative will involve amending the law to tap into previously undisclosed and undeclared revenue sources, as the cash-strapped government seeks additional funds while forgoing syndicated loans.

Details have surfaced as President William Ruto’s administration moves to enact new tax measures, which critics argue will disproportionately impact the poor and middle class.

Outlined in the Finance Bill of 2024, the National Treasury seeks to exempt the Kenya Revenue Authority (KRA) from the law that currently restricts access to taxpayers’ private data.

“The processing of personal data is exempt from the provisions of this Act if disclosure is necessary for the assessment, enforcement, or collection of any tax or duty under a written tax law,” reads the Bill.

This amendment grants KRA authority to compel banks and telecommunication companies to provide customers’ financial transaction statements.

Consequently, taxpayers could face tax demands if their financial activities exceed declared tax amounts.

Presently, the law limits data access unless it pertains to personal activities, national security, or public interest, with exemptions for court-ordered disclosures.

If approved, KRA would have visibility into all income sources beyond salaried earnings subject to Pay-as-You-Earn (PAYE).

This means KRA could monitor transactions involving Paybills, bank accounts, and apps used for cash receipts by businesses and individuals.

However, evidence obtained illegally from private individuals’ data has often been dismissed by judges, frustrating many investigators.

The government aims to collect over Sh350 billion more in tax revenues this fiscal year to reduce the deficit in its Sh3 trillion budget.

To achieve this, traders would be mandated to disclose sales to KRA and integrate the electronic tax system (e-Tims).

Non-compliance with electronic document submission, including detailed transactional data, could incur fines of Sh2 million per month.

Aside from granting new powers to KRA, the proposed tax law hints at targeting the middle class extensively.

For instance, companies supplying goods to government agencies would be subject to tax, whereas only services currently face withholding tax.

Additionally, Molo MP Kuria Kimani’s bill proposes an increase in excise duty on telephone and internet data services from 15% to 20%, potentially impacting the cost of data and Kenya’s digital economy plan.

Excise duty on money transfer services and betting has also been raised to 20%.

Banking services, previously VAT-exempt, would now attract VAT and excise duty, likely leading to higher bank charges.

Furthermore, foreign exchange transactions could be subject to taxes, impacting forex bureaus and possibly influencing import prices.

Although Treasury appears to have spared most household goods from taxation, bread will no longer be zero-rated, potentially increasing consumer costs.

In conclusion, the proposed tax amendments signal significant changes in revenue collection and taxation policy, with potential ramifications for various sectors and consumer pockets.