How tax administration is going digital

The revenue authorities have over the past years adopted various technologies in an effort to enhance tax

compliance and grow tax revenue. The complexities of tax administration as well as increase of information is driving tax authorities to digitiise their tax administration process.

The Kenya Revenue Authority (KRA) started their digitisation journey by providing taxpayers with an editable online tax return form. Thereafter KRA invested in Simba custom platform, a legacy system.

Later on, they introduced TEAMS, the first attempt on efiling, which culminated to iTax, the current electronic filing system. With the iTax platform, taxpayers can file their tax returns, receive assessment notifications and submit responses.

The KRA has made significant progress in digitisation. However, there is still a lot of ground to be covered. A look at other revenue authorities reveals the trends and possible direction that the KRA is likely to take. For instance, in America and Europe, some tax authorities have invested in technology solutions which have cognitive computing to identify possible tax evasion. There is also a growing use of data analytics to detect taxpayers’ declaration inconsistences. Some of the tax authorities in Europe are now demanding real time invoice reporting. Real time invoice reporting demands a taxpayer to report their business-to-business (B2B) sales data to the tax authority in real time using the invoicing system. The Hungarian tax authority requires the B2B taxpayer to file their accounts receivable and payable ledger on a daily basis, using real time reporting technology. To bring it back home, KRA is currently considering the introduction of real time invoice reporting for the purposes of VAT compliance and also replacing the ETR/ESD machines with an E-invoicing system. In South Africa the South African Revenue Service (SARS) requires taxpayers to reconcile their VAT returns with the general ledgers and report the same while filing the VAT tax return.

The writer is Manager, Deloitte.