The government is expanding the mandatory use of taxman’s Personal Identification Numbers (PINs) for various government services, aiming to improve tax compliance and identify individuals filing nil tax returns. 

Under the plan, the Kenya Revenue Authority (KRA) will leverage PIN information to snoop on individuals’ and companies’ activities across different government services, enabling them to identify potential tax evasion and avoidance.  

The move yesterday sparked concerns about potential privacy breaches and increased government surveillance. 

Under the proposed legislation by the National Treasury, most government services will now require a PIN certificate.  

This includes registering titles, approving development plans, registering motor vehicles, business names, and companies.

Additionally, importing goods, paying utility deposits, and obtaining government contracts will necessitate a PIN. 

This came as the taxman also issued a notice to visitors to Kenya and mobile phone importers to declare their International Mobile Equipment Identity (IMEI) numbers to customs officials.

Just last week, the Communications Authority (CA) directed all phone manufacturers, retailers, and mobile network operators to upload each device’s IMEI number to a KRA-provided portal to facilitate tax compliance monitoring.

KRA also notified importers and assemblers to obtain necessary regulatory clearances and permits from CA. The IMEI number is a unique 15-digit serial code identifying each mobile device globally. If a mobile phone is connected to a network, its IMEI number is already registered.  

Meanwhile, the PIN requirement also covers financial transactions like opening bank accounts, registering with professional bodies, and registering mobile money services. Additionally, conducting online business and registering trusts will require individuals to provide their PIN. 

The government’s focus on those who file nil tax returns stems from concerns that individuals reporting no income may have undisclosed economic activity.  

KRA aims to address this by using PIN data alongside monitoring bank accounts to identify discrepancies and catch tax cheats.  

A KRA PIN certificate is a document issued by the taxman that contains a unique Personal Identification Number (PIN) assigned to an individual or entity.  

This PIN serves as a crucial identifier for tax purposes and is required for various government services and financial transactions in Kenya. Essentially, it is a unique identifier that links you to the KRA tax system and is used to track your tax obligations.

The expansion of its use in nearly all public transactions is expected to increase revenue collection government reckons but critics argue it could infringe on citizens’ privacy. 

They argue the government needs to ensure a balance between tax compliance and data security to address these concerns, experts say. 

KRA previously said it plans to leverage Artificial Intelligence (AI) technology to bolster its efforts in catching tax evaders. 

The taxman reckons the implementation of AI could significantly improve the agency’s detection capabilities and end tax evasion. 

The government recently also confirmed that one of Kenya’s leading telecommunication companies has already started sharing real-time data on mobile money transactions and other relevant information with the KRA as part of a government initiative to enhance tax compliance and bolster revenue collection, the government has confirmed. 

The government says its recently announced approved data management strategy aims to increase the usage of data and analytics for compliance risk management. 

“We are making good progress in enhancing the use of data to improve taxpayer compliance. The recently approved data management strategy aims to increase the usage of data and analytics for compliance risk management through: integration with key third party sources for revenue assurance and risk management-integration with telecocommunication companies has commenced and will be finalized by June 2025,” said the government. 

By utilizing telecommunication data, the government reckons it can gain valuable insights into the economic activities of individuals and businesses, enabling it to identify discrepancies between reported income and actual spending patterns.  

KRA Commissioner General Humphrey Wattanga reckons the implementation of AI technology is expected to significantly improve KRA’s detection capabilities, as the system can analyse millions of data points and identify complex patterns that would be challenging for human auditors to uncover.  

This will enable KRA to flag suspicious activities and potential red flags in real time, allowing the agency to nab tax cheats more effectively. 

According to Commissioner General Humphrey Wattanga, the new AI-powered system will be capable of mining vast troves of data to detect patterns and anomalies that could indicate fraudulent tax practices. 

“The adoption of data science, machine learning, and Artificial Intelligence (AI) will strengthen our ability to identify and address potential tax evasion through data-driven decision-making,” said Mr Wattanga.