PUBLISHED ON February 16th, 2015

KRA approves merger of tax departments

The Kenya Revenue Authority (KRA) has approved the merger of Kenya’s domestic taxes into a single department as part of a wider reform programme aimed at supporting increased revenue collection.

This is expected to strengthen EAC member’s revenue collection through the Single Customs Territory, which provides for collection of duties at the first point of entry.

The new department of domestic taxes will hold various divisions, including a large taxpayers office, a medium taxpayers office, regional offices and a debt and refunds management unit.

Alice Awuor has been appointed to head the new department with effect from next month.

In a memo to staff, Commissioner General John Njiraini said the move would improve efficiency in several areas, including policy formulation, taxpayer mandate management and handling of special taxation areas, international taxation and debts and refunds management.

Under the East Africa Customs Union, each member will be in charge of domestic taxes like VAT, excise and property taxes, while import duties will be handled by a regional customs body. The revenue collected will be assigned to the country of destination.

This has already been implemented at the Mombasa port where customs officials from landlocked countries clear goods destined for their countries, reducing the motivation for dumping of cargo in the countries of transit. Kenya plans to enact laws establishing the Customs and Border Protection Agency this year.

The changes at KRA are part of job evaluation recommendations by consultancy firm PricewaterhouseCoopers, whose initial implementation started in July 2012.

The consultants recommended trimming of KRA’s structure to reduce the reporting chain and the number of direct junior staff members managed by each person.

Officers who directly report to the commissioner general were reduced from 17 to 10, with the merging of several support departments that were headed by commissioners.

Resource mobilisation

“HR reforms are being undertaken to enhance capacity to drive the changes required to achieve an effective workforce capable of supporting Vision 2030 resource mobilisation goals,” said Mr Njiraini in an interview with the Daily Nation.

“The reforms focus on both the departmental structure and competency attributes.”

The KRA board also endorsed, at a meeting last month, the upgrading of the Kenya School of Revenue Administration (KESRA) to Level One, making it a direct reportee to the chief executive officer. This grants the institution operational autonomy as it targets to become a university offering capacity building courses to revenue agencies from across Africa.

“The move is consistent with our strategy to develop KESRA into a national and regional centre of excellence in fiscal and tax management training,” said Mr Njiraini.

The Technical Support Services department will also be restructured to create a strategy, innovation and risk management department, whose mandate will include leading innovation in tax administration practice, corporate planning and research, enterprise risk management and the utilisation of innovative practices to market KRA and its products.

Other changes approved by the board, which is headed by Marsden Madoka, include restructuring and renaming of the Customs Services Department as the Customs and Border Control Department, and the establishment of a unified structure for the handling of legal services for both tax and non-tax matters to ensure better deployment and utilisation of corporate legal resources.

“The modalities for the integration of operations of the existing dockets shall commence with a view to achieving completion by March 1,” said Mr Njiraini.

Source: The East African

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