Streamlining tax compliance for small and medium-sized enterprises (SMEs) via digitalisation, spearheaded by the KRA.

Streamlining tax compliance for small and medium-sized enterprises (SMEs) via digitalisation, spearheaded by the KRA.

In a bid to drive growth and sustainability for Micro, Small, and Medium Enterprises (MSMEs), the Kenya Revenue Authority (KRA) is taking significant strides to make tax compliance less burdensome for these businesses.

Recognising the crucial role MSMEs play in Kenya's economy, contributing to job creation, innovation, and inclusive growth, KRA is committed to supporting these businesses by rethinking its role as an enabler of compliance, rather than a mere regulator.

Junior secondary teachers, too, are seeking autonomy from primary schools, but let's stay focused on the economic front for now.

The Kenyan government, through KRA, is working towards a system where taxation is seamlessly embedded into everyday business activities. This integration is being achieved through digital systems, embedded compliance, and data analytics. These tools can help identify patterns of non-compliance and target support or enforcement where needed, ensuring a level playing field where all businesses contribute fairly.

Digitalization of tax processes is a key way to support MSMEs, including integrating tax into natural business systems used by these businesses. Accounting software, point-of-sale systems, and mobile-based platforms are increasingly being used by MSMEs, creating an opportunity for tax authorities to embed tax functionalities directly into these systems.

Automating routine tax processes such as registration, filing, and payment through mobile apps and digital platforms can significantly lower the cost and effort of tax compliance for MSMEs. KRA has announced the development of user-friendly digital platforms for small and medium enterprises to enable simple and efficient tax filing.

To further simplify compliance, KRA is partnering with accountants, bookkeepers, and tax consultants who use cloud-based tools and mobile services. Smartphone applications like WhatsApp can allow MSMEs to file taxes, access records, get reminders, and receive guidance in real-time.

In a move to cater to the younger demographic, KRA has introduced a digital chatbot service, specifically targeted at the 21-30-year-old demographic, to provide instant, tailored support for MSMEs.

Despite their significant position in the economy, the tax contribution of MSMEs is below potential. KRA's initiatives include the rollout of simplified tax regimes, the integration of eTIMS (Electronic Tax Invoice Management System), and the development of user-friendly digital platforms.

However, many MSMEs still face challenges in meeting their tax obligations due to limited resources and complex administrative processes. The Micro and Small Taxpayers Department at KRA is working diligently to address these issues and make tax compliance less burdensome for these businesses.

On a separate note, August inflation in Kenya has ticked up to 4.5 percent, causing concern among Kenyans. The Kenyan government is also working to boost the fortunes of smallholder farmers through a dairy project worth Sh451.5 million.

These initiatives demonstrate the Kenyan government's commitment to supporting businesses and farmers, and to creating an environment conducive to growth and prosperity. As these efforts continue to unfold, it's an exciting time for the business landscape in Kenya.

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