This morning the Commissioner for Domestic Tax Ms Alice Owuor issued a notice to the effect that KRA has terminated the filing of manual tax returns. “Kenya Revenue Authority wishes to inform all companies and individual taxpayers (including employees) that no manual income tax returns will be accepted at any KRA office. The income tax returns should be filed through the iTax system,” Ms Owuor said.
The move by KRA to terminate the filing of manual tax returns has been made in order to allow KRA to grow its revenue collection that has been largely underwhelming in the 2015/2016 financial year. This is because KRA thinks that iTax will encourage many Kenyans to file their taxes as online filing eliminates the tedious manual paper work and the need to drive or walk to KRA offices to handover those manual forms. The process of verifying manually filed forms are also time consuming hence taxpayers are forced to waste precious hours in long queues. The other obvious advantage iTax has over manual filing system is that loopholes that exist in the manual filing system including possibility of bribing KRA employees so as not to pay taxes are sealed.
The advantages of iTax over manual filing system cannot be overstated. However, terminating the manual tax returns system right now is premature and will work against the good intentions KRA has. Foremost, if you can remember, when KRA fully launched the iTax system the System crashed due to traffic overload. Over the months KRA must have expanded its server capacity and today the iTax System could be stable even at peak traffic demand. What I am not sure of is if KRA has actually accounted for increased traffic during tax deadlines if those who have been doing manual tax returns abandon their preferred tax returns channel to opt for the iTax System.
Even if the iTax servers will be able to accommodate the increased traffic, there are still two major problems with iTax System that KRA must sort before KRA abandons the manual system. The first problem is that the iTax System is very complicated and not user friendly, and the second is that there are those who have identified inaccuracies in the iTax System.
As a techie, I believe that a system I find complicated to use will be complicated to no less than 90% of users. Around November last year I tried to file for VAT returns through the iTax System and after being on phone with several KRA customer care representatives, including seeking help from a friend who works at KRA, I had to give up and go back to filing the VAT returns manually. Issues ranging from the type of computer I use, the OS bit running in my computer, the version of Microsoft Office I use, and the difficulty to add VAT as a type of tax my company should file for were too complicated to resolve.
Given that I haven’t changed my computer, upgraded my OS and bought a new Microsoft Office suit, the same issues I faced when trying to file for the VAT via the iTax System remain, and one thing I know for sure is that I cannot buy a new computer, upgrade my OS, and buy a new Microsoft Office Suit simply because KRA wants me to file taxes online. I believe that it is up to KRA to come up with an online tax filing system that anyone with any version of OS, any type of computer, and any type of a spreadsheet can use to file their tax returns.
KRA should also know that most Kenyans (99% of those online) use smartphones both as a default computation device and as the default gateway to the Internet. With this knowledge, it is up to KRA to develop an iTax System that works on smartphones, even if it means developing a mobile iTax App that does 100% of what the PC based iTax System does and works efficiently.
Before KRA can simplify the iTax System so that anyone can easily use it without having to resort to calling their customer care representatives, before they can develop an iTax mobile App that is both complete and easy to use, then they have no businesses forcing Kenyans to use inefficient complicated systems to file their returns.
The second issue of inaccuracy must also be looked into. According to a comment in a Facebook update regarding this subject, the iTax System was described as “not even accurate in calculating income tax”. That after the commenter worked for 4 months in 2014, “the system spread the income for the 4 months to cover the whole year and there was no way of telling it otherwise – thus the tax due was inaccurate”. The commenter further states that “right now, the new excel sheet has an inaccurate way of calculating PAYE” which he explains were impossible to figure out even with the help of 3 accountants. Basically, the formulas in the iTax Excel documents for filing income tax do not take into considerations situations where someone has worked for less than 12 months in a year.
What I would urge KRA to do is to rethink their decision to terminate the manual filing, and first work on making the iTax System fluid and efficient free from errors described above, otherwise they will make many Kenyans to default filing their tax returns hence their intention to grow their revenue collection will not be realized.