The Kenya Revenue Authority (KRA) is cracking down on and gathering information from Safaricom regarding businesses that have abandoned their M-Pesa’s Paybill, Buy Goods and Pochi La Biashara accounts to escape taxes.
In light of increased scrutiny by the tax authority, some enterprises have transitioned from mobile money payment systems back to cash transactions.
According to Caroline Rotich, the KRA’s chief manager in the Domestic Taxes Department, the tax agency will collaborate with Safaricom to establish an information-sharing system to allow for follow-ups and compliance checks on businesses that have ceased using mobile money services.
“We are developing strategies for addressing this issue and have deployed several officers to conduct compliance checks in major towns,” said Rotich.
Businesses are shifting away from mobile money payment methods due to concerns about KRA’s surveillance of digital payments through M-Pesa and other mobile money platforms. The government intends to expand the tax base by monitoring digital transactions through M-Pesa.
Data safety queries
M-Pesa dominates mobile money payments in Kenya, accounting for 99.9% of such transactions, as reported by the Central Bank of Kenya.
Between March 2021 and 2022, M-Pesa users conducted transactions valued at over Ksh13 trillion. The majority of these transactions (87.5%) involved peer-to-peer payments, with an additional 12.5% attributed to PayBill, M-Pesa’s merchant payment service.
As part of its economic revival plan, the government has set ambitious revenue collection goals for the KRA: Ksh3 trillion in the 2023/24 fiscal year and Ksh4 trillion over the medium term, according to the Treasury’s draft budget statement.
It’s worth noting that permitting the KRA to access data on Safaricom’s M-Pesa users might raise concerns about privacy and potential violations of Kenya’s Data Protection Act of 2019. Kenya’s data protection commissioner, Immaculate Kassait, has underlined that data protection regulations apply to both government agencies and private organizations.
“Government institutions often mistakenly assume that data protection laws only apply to the private sector. The law is applicable to all organizations. Multilateral organizations have previously required government institutions to comply with the Data Protection Act before accessing financing,” Kassait said via LinkedIn.
Email your news TIPS to Editor@nairobilawmonthly.com, and to advertise with us, call +254715061658 anytime of the day
