2024: The year KRA trained its guns on paybill, till numbers

An employee of Kenya Revenue Authority assists a client to file iTax returns at Nyeri Region Headquarter Office,on June 29,2019.Only a handful of clients turned up to file their iTax returns at the last minutes as compared to the previous years .[Kibata Kihu/Standard] The government is yet to provide further details on how mobile payment termination points will be used as tax registers, an exercise that was supposed to commence during the Christmas holidays. The move is among the strategies that would improve collections by the Kenya Revenue Authority (KRA), with small businesses poised to be the main target. Senior Advisor to President William Ruto's Council of Economic Advisors, Moses Kuria announced the move during the 2024 KRA Tax Summit in October 2024. He clarified that it would extend beyond telcos, roping in all other payment service providers. Paybill and till numbers are the most commonly used payment terminations by businesses due to their flexibility as they can be accessed through mobile phones. There are pay bills and till numbers that terminate with the mobile telco provider while others with financial institutions such as banks, Saccos, and microfinance banks. Mr Kuria argued that while there are about two million such payment termination points yet there are just 200,000 documented tax registers. "We have agreed with our (KRA) Commissioner General that all these pay bill numbers come Christmas, will be used as virtual electronic tax registers (ETRs) for purposes of KRA," he said during the summit. The use of till and paybill numbers saw an increase during the Covid-19 period which attracted small businesses such as general shops that previously operated on hard cash. Pochi la Biashara was also launched in 2020 which allowed individual business owners and traders such as matatu conductors to receive money to their registered numbers but was separated from their personal M-Pesa funds. According to the Safaricom 2024 Annual Report, one month of active lipa na M-Pesa merchants grew by 4.3 per cent to 633,000. This figure was 123,000 in 2019. A lot of growth in mobile payments was embraced during the Covid-19 pandemic period (in 2020 and 2021). For example, in 2021, Safaricom, the country's leading telco reported a 74.8 year-on-year (Y-o-Y) increase in the number of one-month Lipa na M-pesa tills to 302,000. In 2020, this growth was 40.1 per cent Y-o-Y growth to 173,000. Safaricom reports that as of 2024, 9.5 million SMEs and enterprises opted in on M-Pesa. This is compared to 3.2 million in 2023. For Safaricom and Airtel, SMEs are a key component of their business model, especially in mobile money. Safaricom states in the report that enterprise and business comprise an important part of the telco's ecosystem, focusing on micro, small, and medium enterprises (MSMEs). Our aim was, therefore, to provide M-Pesa with an offering of various payment acceptance points to enable MSMEs to digitise their businesses," reads the report in part. Mobile money Safaricom has been vocal about its reservations about converting till numbers into ETRs. When asked about the same, Airtel Money's Managing Director Anne Kinuthia said they are willing to comply. "This hasn't been made official yet. If these guidelines are published, we will be able to review the requirements, but we remain committed to comply (with all directives put forward by the regulators)," she told The Standard. Ms Kinuthia noted that mobile money is key to the business operability of SMEs. "Many SMEs utilise mobile money for payroll management, payment to suppliers, receive payments from customers, and even access credit," she said. Having small businesses pay tax is one way of the government's push to improve collections from the ever-evasive informal economy which employs almost 16 million. Some businesses however are already shying away from using their till and paybill payment points, opting for cash transactions or for customers to send money directly to their phone numbers. This adds to the challenges that the government will have to ensure small businesses comply. One of the strategies to be applied by KRA is to metamorphose and adopt a more corporate demeanour as revealed by Commissioner General Humphrey Wattanga. "We are taking a bit of a corporate approach, looking at our taxpayers as our clients to understand their context," he said. "We are engaging them through their respective sector organisations. We have a forum where we engage the juakali sector. It is a process obviously because there has been a historical challenge." During the Taxpayers Awards held in November 2024, President Ruto said his administration has resolved to establish a fair tax system that relies on simplicity and transparency to encourage compliance. "Consistent collaboration between the National Treasury, the KRA and other stakeholders has provided a robust platform for the development of inclusive policies, especially for micro-, small and medium enterprises," he said.

2024: The year KRA trained its guns on paybill, till numbers

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2024: The year KRA trained its guns on paybill, till numbers

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