KRA to investigate Uber over tax remittance

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By JOHN NGIRACHU
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The Kenya Revenue Authority (KRA) has asked MPs to come up with a special law for the regulation of the taxi-hailing apps rather than one for the entire taxi sector that conventional taxi operators are advocating for.

Top officials from the revenue collector however hailed the use of technology in the sector as it is easier to collect taxes from it as well expand the number of taxpayers.

They however said they were not satisfied with the amount paid by Uber, the dominant company in the sector, and would be auditing its tax obligations to see whether the right amount has been paid.

“The automated platform created by the app hailing taxi service providers creates a powerful linkage for obtaining intelligence on the drivers and vehicle owners who ordinarily are expected to file and pay taxes,” said Benson Korongo, the Commissioner for Domestic Taxes.

Mr Korongo made the presentation to the Transport Committee of the National Assembly, which is considering petitions submitted by members of the Kenya Taxi Cab Association and drivers contracted to Uber Kenya.

He said that if KRA was to establish a link with the various technology platforms, such as Uber, it would enable them to see everybody that has used them to get a taxi, how much they have paid and how much should therefore be paid as tax by the company, the driver and the owner of the vehicle.

KRA said the revenue from the 42 players in the taxi service, both the conventional and the technology-based, was Sh283 million from 2014 to date.

Mr James Ojee, the deputy commissioner for domestic taxes, said Uber Kenya specifically has paid Sh31 million — Sh7 million as Pay as you earn (PAYE), Sh19 million as Value Added Tax and Sh5 million as Income Tax.

The bulk of the payments is in VAT because the 25 per cent collected by Uber is a commission charged on the driver of the taxi for using the app to locate passengers.

“As far as their declaration is concerned, they have filed returns with KRA,” he said.

Uber has a company in Kenya, which pays corporate tax, but the parent company is in the United States and there are branches in other countries.

This brings about the possibility that profits are being repatriated, the reason the KRA officials said they are not completely happy with the accuracy of returns.

“On accuracy of returns, we’re not happy at 100 per cent. We would want to look at their business on cross-border issues, what we call transfer pricing. It is one of the taxpayers we have profiled and will take it through an audit process so that we are satisfied that what we get from them is right,” said Mr Korongo.

Members of the committee appeared unsatisfied with the submissions on the amount paid in taxes and the regulation of the sector.

“You are receiving tax from someone who is doing illegal business. What Uber is doing does not comply with the Traffic Act,” said Emmanuel Wangwe (Navakholo, UDF).

“Those people, from the figures we have heard, collect billions. If you do your calculations right, you’ll find that they take away billions from this country,” said Committee chairman Maina Kamanda.

Mr Korongo compared the taxi-hailing apps to M-Pesa, the revolutionary money transfer service offered by Safaricom.

In both cases, he said, the companies get paid for providing a technology platform for the service.

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