On Friday, October 11, Kenya’s government announced exciting plans to link M-PESA Paybills and Till numbers to the tax system by December 25, 2024.
This initiative is part of a larger effort to reform the tax system, aiming to broaden the tax base and reduce tax evasion. By integrating mobile money transactions with tax systems, the Kenya Revenue Authority (KRA) hopes to improve transparency and efficiency in tax collection.
Moses Kuria, Senior Economic Advisor to President William Ruto, shared this news during a tax summit, highlighting the government’s commitment to using Kenya’s digital payment infrastructure for tax purposes. “Come Christmas 2024, all paybills will also be virtual ETRs for tax collection,” Kuria stated, emphasizing that there would be no exceptions.
This move may face pushback from traders who frequently use mobile money, as they might see it as an added burden. The decision comes in response to the gap between the number of registered Electronic Tax Registers (ETRs) and the vast number of daily digital transactions.
In Kenya, there are over 2 million digital payment touchpoints through banks and telecoms, but only around 200,000 merchants currently use ETR devices to record Value Added Tax (VAT) payments. Integrating M-PESA Paybills into the tax system could increase the number of tax-registered touchpoints tenfold.
Kuria noted that Kenya’s advanced digital payment landscape positions it well for this new tax initiative. He pointed out that, unlike many other countries, Kenyans of all education levels have widely embraced mobile money platforms like M-PESA. “We have decided that there will be nowhere to hide for anybody. We already have a huge advantage because of the widespread digitisation of payment systems,” he explained.
KRA Commissioner General Humphrey Wattanga also spoke at the summit, highlighting how modern technologies like the Internet of Things (IoT), artificial intelligence (AI), and blockchain can further streamline tax processes. “Our ongoing policy reforms and modernization efforts will enhance revenue mobilization through improved efficiency and compliance,” he added.
As Kenya moves to integrate mobile money into its tax system, the government expects to capture more revenue from previously unregistered transactions, helping to close tax loopholes and promote greater accountability.
