More than 62,000 individuals and an unknown number of businesses will be blocked from accessing critical public services as the taxman moves to punish tax cheats with the termination of personal identification numbers (PINs).
The Kenya Revenue Authority (KRA) Monday gave the taxpayers up to June 3 to file their returns or have their PINs deregistered as part of a wider plan to smoke out tax cheats. The taxman has been pursuing businesses and individual taxpayers, mostly high-net-worth persons, that owe it nearly Sh250 billion.
“Failure to file tax returns unless cause is shown to the contrary, the Commissioner of Domestic Taxes shall have their Personal Identification Numbers (PINs) deregistered and cancelled from the KRA system at the expiry of thirty (30) days from the date of this notice,” the KRA said.
This impending deregistration of PINs could see thousands of Kenyans cut off from making critical transactions that require proof of active registration as a taxpayer.
The transactions that require proof of an active PIN certificate include registration of land titles, approval of development plans, registration, transfer and licensing of motor vehicles, and registration of business names and companies.
Others are underwriting of insurance policies, customs clearing and forwarding, payment of deposits for power connections, supplying goods and services to the State, as well as opening accounts with financial institutions.
The Tax Procedures Act of 2015 empowers the KRA to deactivate the PINs, issue travel bans on suspected tax cheats, collect duty directly from suppliers and bankers of defaulters and prosecute those in arrears.
The KRA, which is under pressure to raise tax collections, is seeking to cripple the individual taxpayers and businesses to force them to settle their dues.
The taxman’s intelligence and strategic operations have in recent years been investigating rich people’s sources of income and their expenditure against their tax remittances.
It has also been analysing companies’ financial dealings, especially those doing business with the national and county governments, to unearth tax cheats through matching their payments and income declared.
The crackdown follows an order by President Uhuru Kenyatta three years ago requiring the KRA to keep a watch on high-net-worth individuals whose lifestyles were not in tandem with the taxes they pay.
The taxman has been using various databases to pursue suspected tax cheats, including bank statements, import records, and motor vehicle registration details.
The decision to deactivate the PINs comes months after the KRA rolled out the Voluntary Tax Disclosure Programme where taxpayers with arrears for the past five years are to get full or partial relief on penalties and interest on the undisclosed taxes.