Kenya collected 1.001 trillion shillings ($10 billion) in the fiscal year to end-June, a 3.86 percent increase from the previous year, the Treasury said on Wednesday.
Officials in East Africa’s biggest economy are aiming at increasing tax collections to fund several infrastructure projects, including a new railway, and pay for new local administrative structures created in 2013 under a devolved system of government to try to hasten rural development.
Analysts however say the government’s efforts to raise more taxes have been curbed by a low level of tax compliance with unscrupulous businesses and individuals using all sorts of tricks to dodge taxes.
Kenya Revenue Authority (KRA), the tax collector, had increased its audits of firms to catch tax cheats and increase collections, the Treasury said in a statement.
The KRA said it had intensified audits on corporate firms during the fiscal year, having discovered over 25 billion shillings in potential taxes from about 60 international companies that had from 2008 used transfer pricing to declare losses when they had made profits.
Transfer pricing happens when multinationals sell to their parent or subsidiaries abroad at lower prices leading to declaration of lower earnings or even losses, avoiding the payment of billions in tax revenues, KRA said.
($1 = 101.7000 Kenyan shillings)