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Moses Kuria, Senior Economic Advisor to President William Ruto, announced during a recent tax summit that Kenya plans to integrate M-PESA Paybills into its tax collection system by December 2024. This initiative reflects the government’s commitment to leveraging the country’s well-established digital payment infrastructure for tax purposes.
“By Christmas 2024, all Paybills will also serve as virtual Electronic Tax Registers (ETRs) for tax collection,” Kuria stated, emphasizing that the policy would apply universally, with no exemptions.
This move, however, may face opposition from traders who rely heavily on mobile money platforms and may perceive the integration as an added burden. The government’s decision stems from the significant gap between the number of registered ETR devices and the high volume of digital transactions occurring daily. While Kenya boasts over 2 million digital payment touchpoints across banks and telecom platforms, only around 200,000 merchants currently use ETR devices to record Value Added Tax (VAT) payments.
The integration of M-PESA Paybills into the tax system is expected to increase the number of tax-registered touchpoints tenfold, significantly expanding tax compliance in Kenya’s economy.
Kuria highlighted that Kenya’s digital payment infrastructure, particularly the widespread adoption of M-PESA, places the country in a favorable position to implement this tax initiative successfully. Unlike in other countries where digital payment adoption has been slow, Kenya’s population, regardless of education level, has embraced mobile money platforms as part of everyday life.
“We have decided that there will be no hiding place for anyone,” Kuria remarked, pointing out Kenya’s advantage in digital payment usage. He noted that even those with minimal formal education have integrated mobile payments into their daily routines, making the country well-positioned for this tax reform.
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