The Kenya Revenue Authority (KRA) is preparing to train specialists in computer auditing in an effort to analyze data from taxpayers’ computers, including hidden accounts and deleted files, with the intention of uncovering instances of tax fraud.
According to information provided to the International Monetary Fund (IMF) by the Treasury, the KRA intends to have trained specialists with advanced Microsoft Excel skills by the end of June next year. This initiative is part of a broader plan to refresh and upgrade the skills of staff members in the audit function.
Additionally, the KRA plans to establish audit quality review teams for all Nairobi Tax Service offices by June next year. This move is aimed at improving compliance levels among taxpayers.
A high-ranking official within the KRA, speaking on condition of anonymity, clarified that this action is designed to bolster the tax authority’s ability to investigate both physical and digital records of taxpayers, ensuring that they fulfill their tax obligations.
The source stated, “KRA committed to strengthening regional audit centres to have enough capacity in audits and implementing data-driven compliance risk management measures to ensure every taxpayer is remitting a fair share of taxes.”
The Kenya Revenue Authority (KRA) is taking steps to enhance its capability in uncovering tax fraud in the digital realm. With a majority of evidence gathered during investigations being in digital form, such as emails, texts, videos, audio, and image files, KRA recognizes the need for specialists in computer auditing.
KRA aims to expose tactics like disguising files by giving them harmless names or changing their extensions to different file types. Dealing with such crimes requires sophisticated data acquisition, mining, and analytics.
Aside from training, KRA plans to bolster its data analytics prowess to reconstruct digital transactions and gain insights into intricate dealings. This includes utilizing advanced analytics and expert models for detecting fraud and managing risks.
This recent initiative, coupled with the establishment of a digital forensic laboratory, is set to disrupt those who exploit the digital realm to evade taxes. The forensic lab will possess tools for memory analysis, file recovery, uncovering hidden files, and retrieving passwords.
However, KRA faces challenges in keeping up with rapidly evolving technologies like cloud computing, which raises concerns about data protection and jurisdictional laws.
In 2021, KRA launched its eighth strategic plan, focusing on revenue increase through simplified taxation, technology-driven compliance, and expanding the tax base. The agency targets collecting Sh6.8 trillion over 2021/22 to 2023/2024, with a push towards Sh3 trillion in 2024/25. This strategy aligns with the government’s goal to address the informal sector and digital economy while broadening the tax base to manage the rising national debt share.
While taxes financed 71.9 percent of Kenya’s budget in 2011/12, the reliance on taxes has decreased to 56.8 percent in the 2021/22 budget, leading KRA’s efforts to strengthen tax enforcement and revenue collection.