Kenya’s Tax Authority Unveils Innovative Database to Combat Tax Evasion

Kenya’s Tax Authority Unveils Innovative Database to Combat Tax Evasion. The Kenya Revenue Authority (KRA) is currently considering a new transfer pricing database, enabling its agents to effectively review multinational company transactions to help detect tax evasion and enforce compliance.

Kenya's Tax Authority Database to Combat Tax Evasion

Kenya’s Tax Authority Database to Combat Tax Evasion

In a proactive move against tax evasion, the Kenya Revenue Authority (KRA) is set to launch a state-of-the-art transfer pricing database. This database aims to revolutionize the way KRA agents compile, analyze, and manage data from cross-border transactions, presenting it electronically for efficient scrutiny.

Transfer pricing, the price at which goods and services are exchanged between related companies, has been a common avenue for multinational corporations to manipulate taxable income and lower their tax obligations.

By exploiting transfer pricing, some corporations shift profits to low-tax jurisdictions, raising concerns among tax authorities worldwide.

KRA’s Response Is a Tool for Enhanced Auditing

To counter these tactics, KRA is taking proactive steps by implementing a comprehensive transfer pricing benchmark tool database. This tool will bolster transfer pricing audits of multinational enterprises and companies in extractive industries, ensuring fair taxation and preventing revenue leakage.

Comprehensive Data Integration

The new transfer pricing database solution will incorporate pricing and margin-based information across various transaction types, including manufacturing, distribution, services, and royalty agreements. This comprehensive approach will enable benchmark studies and provide KRA with invaluable insights for robust auditing practices.

Kenya’s Tech-Driven Tax Landscape

Beyond transfer pricing, Kenya has been proactive in modernizing its tax administration systems. Initiatives like the Tax Invoice Management System (TIMS) and electronic Tax Invoice Management System (eTIMS) have streamlined tax processes, ensuring compliance even among informal and small businesses.

eTIMS Lite: A Platform for Non-VAT Registered Taxpayers

In a bid to expand its reach and ensure inclusivity, KRA has introduced eTIMS Lite, a platform catering specifically to non-VAT registered taxpayers. This user-friendly platform simplifies tax invoicing and payment processes, aligning with Kenya’s broader vision of a digitally-driven tax ecosystem.

Fortifying Kenya’s Tax Regime

With the impending launch of the transfer pricing database and the ongoing digitalization of tax processes, Kenya is reinforcing its commitment to combat tax evasion and promote fair taxation practices. These initiatives underscore Kenya’s proactive stance in creating a transparent and efficient tax environment for all stakeholders.



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