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Digital ID would streamline Kenya’s tax collection if policy priorities are defined

Analyst expects state revenue gains
Digital ID would streamline Kenya’s tax collection if policy priorities are defined
 

An analytical piece by The Conversion has explained how the upcoming digital ID project in Kenya would rationalize the way taxes are paid digitally in the country. However, this will be dependent on a couple of policy priorities which have to be made straight.

The analysis highlights that Kenya, like many African countries, has been trying over the years to modernize the way tax filings and payments are done using technology, but this could become even easier when the unique personal identifier system the government is planning comes to fruition.

Kenya is hoping to have a new digital ID ecosystem in place by February next year.

The digital ID system, the article posits, would enhance Kenya’s tax administration by properly identifying the tax base which will be easier with the putting in place of a centralized citizen database.

It will also enhance compliance by ensuring tax filing or payment details are checked against the digital ID database, as well as facilitate compliance as the digital ID will help reduce the costs involved in manual tax registration, filing or payment processes, the piece notes, citing results of a recent academic study.

To make all of this work better in Kenya and order countries introducing similar innovations to improve on their revenue collection operations, the article says policy priorities should be placed on issues of accessibility and costs related to completing digital filings and payments.

The author notes that for such novelties to make more sense, the technology deployed should be seen to render those processes much easier, and not the other way round.

Further citing their research, The Conversation warns that digital ID systems do not necessarily lead to higher revenues for customs administrations for different reasons, as findings showed in countries such as Eswatini, Ethiopia, and Rwanda.

For tax revenues to improve with the introduction of digital ID, the article suggests that measures must be put in place to ensure that the adoption of digital ID in the given country is universal, while the database is accurate and up-to-date.

Another recommendation is for the Kenya Revenue Authority, for the case of Kenya, to encourage citizens to share valid and up-to-date information with authorities, put in place a strong and efficient data protection framework which would give citizens confidence in how their data is stored and managed, a robust and appropriate cyber-security response infrastructure, and sensitize and support the citizenry on the path of full digitization.

Kenya already has over 5,000 services accessible digitally, and there are plans to add thousands more before the end of this year.

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