The Kenyan government is preparing a bill to be able to monitor taxpayers' banking and telephone transactions through its tax authority, the Kenya Revenue Authority (KRA).

The project aims to combat tax evasion in the country, but by many the proposal has been greeted as an excessive invasion of privacy, not only economic, especially with regard to mobile telephony. Accessing the Mpesa transaction service, for example, involves sensitive private data concerning movements, purchases and the use of one's money in general.

Earlier this week, the KRA came out of the closet, announcing a mass ‘digital surveillance’ programme as a solution to make revenue collection more effective. The KRA started by issuing a directive to commercial bank directors asking them to facilitate the integration of their networks with the iTax platform.

BANKS AND MOBILE TELEPHONY

In a nutshell, it is a first approach by the government to get into the movement of their customers, which is why the Kenya Bankers Association has reserved the right to assess the implications of the directive and the impact it will have on their operations and credibility with their account holders.

More or less the same communication has been sent to telecommunication service providers and mobile phone dealers. The intention is that, by next year, the entire database of all mobile phones in Kenya will be available, indexed by their unique 15-digit IMEI number. If this happens, it will allow the government to access users' activities, including location patterns, transactions and communication history. Mpesa, bank apps linked to accounts and other money transfer systems, including cryptocurrencies, are already in the tax authorities' sights.

According to the government, evasion in Kenya is of tremendous dimensions: in rental income tax alone, the state is collecting only 17 billion shillings a year, when the potential would be around 100 billion. Just as, according to the Treasury Minister, total revenue from taxes from citizens and businesses in Kenya could almost double as a percentage of the entire GDP, from 3.8 per cent to more than 6 per cent.

CONCERNS

These are probably fair calculations and legitimate concerns, however, it is undeniable and normal that the new directives have raised concerns of Kenyans and associations about personal data breaches. Already last year, when the KRA proposed to amend the Data Privacy Act, business lobbies, the Bar Association and private citizen groups had asked Parliament not to consider the proposal. ‘The processing of data for tax purposes involves the sharing of data with other state agencies or tax authorities in other countries for law enforcement purposes,’ Amnesty International had stated in its submissions to Parliament, while the Kenyan Chamber of Commerce had argued that such a change to the law in favour of the tax authorities would set a dangerous precedent for other regulations in favour of various institutions, leading to control over everything.

NEXT STEPS

For entrepreneurs, it makes no sense to change the current system, since by law when the Kenya Revenue Authority has specific doubts it can ask the courts, and through them the banks themselves, for information on a taxpayer or suspicious activity.

The battle is just beginning, certainly the Kenyan government needs to fight tax evasion, but this should be done after purging its foundations and supporting structures of the scourge of corruption. For a virtuous state, it would be clearer and give more confidence to ask taxpayers to be as crystal clear and even ‘spied on’.