Nine in 10 companies operating in Kenya did not pay taxes in the year to June 2022, Business Daily newspaper reported, citing data from the Kenya Revenue Authority (KRA).
Only 84,428 of the 759,164 firms registered for corporate tax paid their dues for the year ended June 2022, reflecting a compliance rate of 11.12%.
According to the report, this could mean that many companies could report losses as a tax avoidance strategy, a gap that the government sought to plug by introducing a minimum tax on corporate sales.
The authority’s data showed that 504,036, or 66.39%, of registered firms, filed returns by June, but only 16.75% of those paid corporation taxes, which indicated they either suffered an operating loss or avoided duty payment.
Resident companies, corporations and trusts pay 30% of their profits through quarterly instalments, while the rate for foreign firms with operations in Kenya is 37.5%.
The KRA’s enforcement unit has been using various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, power records, water bills and data from the Kenya Civil Aviation Authority, which reveals individuals who own assets such as helicopters, the report stated.
(Editing by Brinda Darasha; firstname.lastname@example.org)