The Kenya Revenue Authority (KRA) has embarked on a major upgrade of ageing income tax and customs systems to avert sustained downtimes similar to those which hit the filing of returns last June and clearance of goods at border points in November 2024, impacting revenue collections.
KRA Commissioner-General Humphrey Wattanga blamed the major hitches on iTax, the electronic tax system, and the Integrated Customs Management System (iCMS) on infrastructure, which was installed about a decade ago.
“The downtimes that we have been experiencing are largely because we have systems that are quite dated. We have infrastructure that is 10 years or so and needs to be upgraded,” Mr Wattanga told the Business Daily.
“We are upgrading and modernising our core systems, for instance, iTax and iCMS from a back-end perspective.”
KRA on July 1 allowed individuals and companies five more days to file annual returns for the year ending December 2024 and pay taxes, which were due June 30, following a major system crash after a large number of taxpayers logged on to beat the deadline.
Earlier in November 2024, the iCMS failed, halting clearance of goods through entry points such as the Port of Mombasa, the Jomo Kenyatta International Airport, and inland container depots and container freight stations (CFSs).
Traders were, as a result, stuck with outbound and inbound cargo, including top exports such as tea, because they could not lodge documents onto iCMS, Kenya's sole clearance system.
Treasury Cabinet Secretary John Mbadi had in February said the iCMS system failure had a major impact on revenue collections when the country had started recovering from the effect of youth-led anti-government protests, which had hit economic activity hardest.
The Customs and Border Control Department, however, defied the system hitches to grow collections by 11.1 percent to Sh879.3 billion by the end of last fiscal year in June 2025, a faster growth than the previous year.
“Last November, the hitch on iCMS was an infrastructure issue. We need to upgrade, hence this digital transformation journey from a computing and storage standpoint, and even considering moving to the cloud so that we have much more scalability and capacity,” Mr Wattanga said.
KRA adopted the iCMS in October 2021, marking a shift for the country, which for a long time lacked an integrated customs management system aligned with those used by other East African Communities (EAC).
The iCMS involves submitting export or import documents into a single-window system and is estimated to reduce clearing time by at least 60 percent and provide an efficient interface with the customs management systems of the EAC neighbours. In the iCMS, traders are required to submit sea manifests for both imports and exports 48 hours before a vessel arrives or departs.
The upgrade of the systems is part of the revenue agency’s digital transformation strategy under its 9th Corporate Plan running between July 2024 and June 2029.
KRA says the transformation is aimed at making tax compliance simple, seamless, and taxpayer-centric.
“This means fewer manual processes, less paperwork, faster turnaround times, and platforms that integrate with taxpayers’ daily business tools,” KRA said in a statement.
The iCMS is complemented by a single customs territory system (SCT), adopted by the EAC partners in 2014, and allows for the joint collection of customs taxes.
Under the SCT deal, clearing agents within the EAC have been granted rights to relocate and carry out their duties in any of the partner states as part of a scheme to improve the flow of goods and curb dumping. Importers of commodities covered under the SCT are required to lodge import declaration forms in their home country and pay relevant taxes to facilitate the export process.
The tax authorities in the respective countries then issue a road manifest against the import documents submitted electronically by the revenue authority of the importing country.
This has come at a time when the KRA’s enforcement unit has enhanced the use of various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills, and data from the Kenya Civil Aviation Authority, which reveals individuals who own assets such as aircraft.
Car registration details are also being used to smoke out individuals who are driving high-end vehicles but have little to show in terms of taxes remitted. Kenya Power meter registrations are also helping the taxman to identify landlords, some of whom have been slapped with huge tax demands.
