This is a solution for the Kenya Revenue Authority (KRA), the body charged with the responsibility of collecting revenue on behalf of the Government of Kenya. The chosen bank has integrated its systems with KRA’s tax validation interfaces, Payment Gateway and CCRS for customs taxes. In 2015, the bank collected the KES equivalent of $1.55bn in taxes on behalf of KRA.
Photo of His Excellency Lazarus Amayo, Kenya High Commision and Amit Agarwal, Citi.
Deputy Commissioner, Finance
The Kenya Revenue Authority (KRA) was established by an Act of Parliament, The KRA Act Chapter 469 of the Laws of Kenya, which became effective on 1st July 1995 for the purpose of enhancing the mobilisation of government revenue, while providing effective tax administration and sustainability in revenue collection. Although it is a government agency, it has undertaken robust reform and modernisation initiatives to transform its administrative processes for efficient facilitation to taxpayers. It operates under the vision: ‘to facilitate Kenya’s transformation through innovative, professional and customer-focused tax administration’.
in partnership with
Kenya Revenue Authority (KRA) is charged with the responsibility of collecting revenue on behalf of the Government of Kenya. For many years, filing of taxes by individuals and corporate entities was manual, which contributed to many inefficiencies in the process, including:
Difficulties for taxpayers in filing manual returns and making payments at KRA offices.
Long and time wasting queues at KRA offices.
Difficulties in updating taxpayers ledgers and reconciling tax receipts.
Difficulties in the management of exceptions.
Cost and time constraints of processing of paper work.
In addition, KRA initially only operated with two agent banks to collect taxes, which created further bottlenecks in the process. Something needed to change.
Therefore, over the past five years, KRA has undergone a rigorous process of re-engineering the collections process to improve their tax collection capabilities which included many consultations within the industry, multiple bank reviews and development of new frameworks.
This process has ultimately resulted in KRA automating its tax systems, requiring integration through the payment gateway (PG) and common cash recepting system (CCRS) interface with multiple commercial bank partners including Citi, so that taxpayers can now file taxes through two platforms, iTax system (for Domestic Taxes) and Simba system (for Customs taxes). The KRA required banks to integrate in line with the newly established automation to provide consistent efficiency for tax payers.
With this automation, KRA increased the number of tax agent banks and made it possible for banks that could integrate with their interfaces to collect taxes on their behalf. Citi became a KRA tax collection agent in 2013 after integrating its systems with KRA’s tax validation interfaces, payment gateway (PG) for domestic taxes and common cash receipting system (CCRS) for customs taxes.
“We are very much pleased with this prestigious Award which is a valuable recognition of our achievements in the area of revenue administration reforms and modernisation. The award also puts us in the right perspective and direction in KRAs transformation agenda in line with our Corporate Vision and Mission.”
By partnering with banks such as Citi, KRA has gained easier access to and collection from Citi’s client base, which is made up of some of the largest taxpayers in Kenya, and KRA integrating with Citi has allowed Citi to avail tax validation and confirmation to KRA’s tax paying clients directly from CitiDirect BE Online Banking.
Citi was able to quickly ramp up its tax collection capabilities and in 2015 collected KES158bn ($1.55bn) in taxes on behalf of KRA. This represents over 15% of all taxes collected by KRA in 2015.
Best practice and innovation
As the entity mandated with collection of taxes, the ability to do so efficiently has a direct benefit for the country of Kenya and its society as a whole who rely on this revenue to operate.
As the KRA began automating their tax integration, banks like Citi had to develop solutions that allowed them to act as tax collection agents for KRA. Since the integration, the main advantages are being realised by KRA and the large corporates utilising the solution alike. These are summarised in the box below.
Real-time update of tax payments to the KRA database. Tax payments that have been successfully validated are updated in KRA’s system on real time basis, providing efficiency around tax collections for KRA.
Zero transaction fees. Tax payments to KRA’s account at Citi are book transfers, meaning that there will be no transaction fees incurred by Citi clients for such payments, further facilitating the tax collection process.
Extended cut-off times. Cut-off time for book transfers is 4.00pm, which allows Citi clients more time to process and authorise tax payments than was the case previously with EFT and RTGS transmissions to other banks.