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Ruto seeks Rwanda’s help in VAT collection model to boost revenues

Kenya is seeking Rwanda’s help to tweak its electronic billing system to ramp up tax collection, especially in the informal sector.

The system has seen Rwanda almost double its value-added tax collections, and Kenya hopes to replicate this success.

Although Kenya already uses electronic billing machines, experts say the system has failed in the informal sector, which significantly contributes to VAT collections. Rwanda’s version of the electronic billing provides real-time data and is increasingly capturing the informal sector, making it efficient in tax collection.

The Rwanda Revenue Authority (RRA) has been training Kenya Revenue Authority (KRA) workers and assisting in benchmarking the software since August 2022. Rwanda provided Kenya with the technology, which has been in use since 2017.

Missed targets

Kenya missed its targets for the first half of the fiscal year 2022 by over $340 million. KRA collected $7.8 billion in the first half of this financial year, of the total $20.1 billion needed for the entire year, meaning the agency will need to almost double its revenue yields in the remaining months to meet the target.

During a joint press briefing in Kigali on Tuesday, President William Ruto, who was on an official visit to Kigali, thanked President Paul Kagame for sharing the technology, which has enabled Kenya’s taxman to collect VAT more efficiently.

“You may want to know that Kenya benefited from support from Rwanda. I called his excellency, and he was gracious enough to give us their ICT platform for VAT management. As a result of that platform, we have seen an improvement in our VAT collection,” President Ruto said.

Since 2017, Rwanda has seen a 48 percent increase in VAT collections.

Real-time data

The deputy commissioner in charge of taxpayers at RRA Jean Paulin Uwitonze said the current version of the system provides real-time data and is connected to tax returns, making it possible to collect VAT and income tax, monitor stocks, and build a database using one system in seconds.

Other African countries – including Nigeria, Ethiopia, Zambia, and Liberia – seek to acquire the system from Rwanda.

“The target is to make the software available on smart and feature phones to reach the all taxpayers,” Uwitonze said.

Source: The East African

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