The Kenya Revenue Authority (KRA) has embarked on a cleanup exercise of its digital system, in a bid to fish out inactive taxpayers and clear fake accounts.
In a public notice, the KRA notified all registered taxpayers to update or correct their registration details as part of a data cleanup exercise of the i-Tax, the system that enables taxpayers to file returns electronically and make payments.
The taxman said the ongoing data clean-up exercise of taxpayers’ Personal Identification Number (PIN) registration details is aimed at ensuring the integrity of the taxpayers’ register to enhance service delivery.
“As part of the data clean-up exercise, KRA has rolled out One Time Password (OTP) for update of taxpayers’ contacts in the iTax system,” said the KRA in a public notice published on Monday.
“Upon logging into iTax, the system will display the mobile number registered in iTax through which an OTP will be sent for validation of contact details. Where the number is incorrect, taxpayers will be required to capture the correct mobile number through which an OTP will be sent to enable access to the iTax system.
Some of the registration details the KRA wants to be updated or corrected include their phone numbers, physical addresses, email addresses, physical location of businesses, residency status, directorships, or partnerships held.
The KRA has for a while been dealing with a problem of fictitious invoices being generated by fake business entities registered in the i-Tax in what has seen the taxman lose close to Sh30 billion in unpaid taxes, the taxman claims in various court cases.
Known as the “Missing Trader Scheme” within the tax circles, the KRA investigators estimate that about Sh65 billion worth of fake invoices have been issued since 2015, with the peak being in 2016 when Sh32 billion worth of fake supplies were done. The traders are described as “missing” because they are using identity theft to register companies.
Last week a Nairobi court issued warrants for the arrest of 10 traders suspected of engaging in in the missing trader scheme after they failed to appear in court to face charges related to tax evasion. The Director of Public Prosecutions Renson Ingonga had approved the charges against them for filing false purchases, thereby reducing their value-added tax (VAT) and income tax liability.
The entities were exposed for mimicking genuine trade which requires that for every sale, there must be a corresponding purchase since a trader cannot purport to sell that which they have not acquired.
These traders were to face charges of filing fake purchases running into millions of Shillings.
The push for compulsory generation of electronic tax invoices was also aimed at addressing the missing trader scheme and nabbing tax cheats.
