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The Kenya Revenue Authority (KRA) is set to implement a cutting-edge system designed to receive and analyze data from over 130 countries in its ongoing efforts to unveil international tax evaders.
This sophisticated system is aimed at bolstering the sharing and processing of information with tax jurisdictions worldwide, taking advantage of the KRA’s vast network of over 130 information exchange partners.
The KRA has been receiving substantial volumes of data from these partners to investigate and uncover tax evasion. However, the deluge of data has overwhelmed the authority, resulting in delays in processing the information and subsequent revenue losses.
To address this issue, the KRA is now seeking a consultant to provide and install an information exchange system. This system will automate the generation of email notifications for incoming data through the Organisation for Economic Co-operation and Development (OECD) common transmission system (CTS) and facilitate efficient tracking of every request’s progress.
Among its core functions, the system will enable the automatic exchange of information and country-by-country reporting, empowering the KRA to share tax rulings information related to various entities and individuals.
According to the KRA, there is a vital need for a system that can seamlessly integrate the wealth of information from partner jurisdictions via the OECD common transmission system. Furthermore, there’s a demand for a more efficient and accurate reporting process that can better manage the inflow of requests.
The KRA highlights that the new system will also enhance the security of data transmission and storage between the authority and other international tax jurisdictions.
At present, the KRA’s Competent Authority Office (CAO) within the intelligence, strategic operations, investigations, and enforcement department handles all incoming and outgoing information requests from its international partners. However, this process primarily relies on manual record-keeping and spreadsheets, with dedicated officers responsible for monitoring request statuses.
The KRA acknowledges that the high volume of partner requests, coupled with the extensive data received for analysis, has caused delays in accessing data, ultimately resulting in lost revenue.
The introduction of this advanced system signifies the latest stride in the KRA’s battle against tax evasion. As Kenya’s financial landscape becomes increasingly interconnected with the rest of the world, the KRA’s efforts to combat tax avoidance are essential for revenue growth.
In its seventh corporate plan, the KRA recognized cross-border tax avoidance schemes as a significant strategic risk that could impede revenue growth. Leveraging the strength of multilateral information exchange with international tax jurisdictions is a key approach for the KRA to bolster its revenue growth.
By adopting innovative technologies and streamlining international information exchange, the KRA is working to ensure a more effective and efficient system to combat overseas tax evasion and protect its revenue.
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