The Kenya Revenue Authority (KRA) is developing a mobile payment module to aid in the collection of the newly imposed turnover tax.
KRA announced the new tax on the first of January 2020. The new tax targets businesses earning less than US$ 50,000 annually. They will be required to pay a 3% tax on gross sales.
KRA is leveraging mobile payments to be able to hit its KES 25 Billion targt within six months.
The new tax could see KRA collect tax from 520,000 more businesses.
So, What is Kenya’s turnover tax?
This is a type of tax first introduced in 2008, which levies small businesses 3% on their gross sales. Irrespective of whether or not they made a profit.
It was established in a bid to expand the tax base, and improve KRA’s efficiency at collecting taxes.
When turnover tax was first introduced, businesses remitted a quarterly return instead of a monthly return. The tax was then scrapped after continuously failing to raise its targets.
KRA has since attempted to bring back the tax, most recently in 2012, upping the tax rate to 5%. It is worth noting that this attempt failed as well.
KRA has made its latest attempt reinstating the tax in Kenya this year for the third time.
