POWERTALK : DECODING TAXES - What Every Kenyan Needs to Know! PART 1

Why 254? Imagine. >> All right. Hello there. Many thanks for joining us right here on Power Talk. I'm Brian Sanko. Ensure that you plug in with us on our social media and let us know where you're watching us from. We'll definitely be glad to sample your feedback and plans. We have an interesting question of the day. We are asking you that's in regards to the topic we're about to delve into if taxes were optional, would you still pay them and why? If taxes were optional, would you still pay them and why? And that's in regards to our topic today. We're making sense of taxes instead of them feeling like it's come. We're just about to delve into it and make it make sense from real talk about money, uh tax refunds, deductions, and also about your money. And with that, we're inviting you to let us know your thoughts about your horror stories about taxes. What are they? We'll definitely be glad to sample that. And joining me live in studio, I'll be speaking to Wairimu Gathoni. She's a tax lawyer, also founder Itara Africa, alongside CPA Fiona Witaba. She's been here before and back again. She's a money clarity expert. Ladies, great to have you here in studio. A power-packed two, great to have you. Good evening. >> Good evening. >> Yes, uh I want us to start off by trying to understand first of all because all of us see taxes as just um another deduction into either our salaries, um I don't leave us pay as you earn, including VAT that currently stands at 16%. Uh there's digital taxes that are floating left, right, and center. How can we make sense of that? And also maybe to just kick start this conversation, what are some of the myths and misconceptions that Kenyans are struggling with about taxes? Wairimu, you can go first. >> Uh thank you. Thank you so much for having me on the show, Brian. I would like to start with the myths. I think the first one is you only pay taxes if you have money which is incorrect. You pay taxes because you've been engaged in a transaction that has triggered a tax. So whenever you think of any transaction that you're involved in just ask yourself is there any tax element to this? So it's not about the money in your pocket. It's the money that has moved you know in and out of your pocket. I think that's the first myth. I also think the other one is that tax is very complex and it's only for high level business owners which is a myth that I think has been conditioned to be like that because if you have no knowledge you can't fight what you don't know. Yeah. So knowledge is power really speaking when it comes to taxes. Yeah. The last myth I would want to say is tax is an accounting function which really is untrue. Tax is a business function. You know accounting is the numbers but then business is the cash flow. It's the the transaction that you're dealing with. >> Yeah. >> Yeah. I think that's right. >> Interesting point is that Fiona when you're bringing the aspect of money why does it always feel like you know you have been scammed? It sounds predatory. But when you look at it legally and we have a lawyer in studio too as well you're mandated to pay tax constitutionally. So why does it always feel like it's a stretch beyond what you should do as a patriotic citizen of this country? >> That's a good question. It always feels like a burden to the Kenyan who does not have the necessary knowledge as to what these taxes are collected for, how they are used, accountability. And I remember last time when I was on the show we talked about if there could be an accountability bridge between the tax man and the tax payer then that would really foster trust and the feeling of being scammed is mostly from lack of a good level of accountability that enforces trust in the taxpayer. It's also from a point of not understanding your taxes because you know anything that you do not know will always be ambiguous and it will always be terror. >> Yeah. >> But once you start bringing things into perspective and people begin to understand, then it does not it doesn't seem like a scam anymore. You understand that I need to pay my taxes because government institutions need to pay salaries to government workers. There's infrastructure that needs to be developed. There's health care government hospitals. They need medicine. The staff there need to be compensated for their work. So it begin you begin to understand that these taxes is not a punishment. It's an obligation as a citizen and I'm playing my part in running the economy. >> Right, absolutely. And I think that opens up this conversation deeper because if you before even get to some of the taxes that Kenyans or even the new ones that were introduced, if you were to delve into 2024, the finance bill protest, the biggest conversation was on the cost of living majorly on taxes. The finance bill was to be introduced and that just led to so many conversations especially right now I think we are talking of possible relief. I don't know if it has been implemented, but you can clarify to on that as well. Um I think we were also talking about on new deadlines for filing taxes. That it previously it was 30th June. Now it's has been moved to 30th of April. Talks of relief of PAYE. I don't know if the bracket is going higher shrinking or it's expanding, but you can help us to make sense of that too as well. Changes to rental income too. Staying on that, what should young Kenyans expect from this now that it has already set base for the busy year and the following year to come. >> What I think they should expect and what I know they should keep in mind is that taxes are the tax arena is evolving. It's evolving in terms of KRA is now leveraging on technology to enforce taxes. And the agenda this year and the and the years to come has been tax base expansion, not tax rises, but tax base expansion. So, what that means is that the reach is going to go further. We're not just only going to reach the people who have been paying taxes, but also the pool wants to include the ones who have not been contributing to this tax collection pool. So, the young people should expect that if you're engaging in a business, if you're engaging in a commercial venture, then you ought to keep proper records because you're not too small for compliance. You're not too small to pay taxes. It's not just for the big companies and big corporations. So, it starts with your record keeping. So, if you're and entrepreneurship is a rising popular venture for for young Kenyans because employment is not looking so promising with the job scarcity and all that. >> Right. >> So, young people should know that if I'm venturing into entrepreneurship, if I'm venturing into any commercial activity, I should keep records from the beginning, from the point I'm registering that business name or that limited company to the point where now how what what am I what is due from me to KRA? >> Yes. With that in the same breath, maybe what do you believe a young Kenyan should look out for in terms of as well a legal perspective. Are there maybe in terms of information that this young Kenyan should be privy to because as she has explained, it looks like they're expanding the tax base, but the factors or the conditions that should stimulate that income are fading away. >> Yeah. I think just to piggyback on what Fiona has said, the question that I've been asking my clients to ask themselves is not just what are the new rates, but also what is the story that the Finance Act 2026 is telling us about the direction that the Kenya Revenue Authority is taking. And like Fiona has put it very well, is number one is just the surveillance, right? So, if you look at the microscopic lens that the Revenue Authority is using now versus 5 years back, now it's broader. That's where the tax base expansion is being seen, you know, laterally, if I may say so. One of the provisions that was in this act, which is hidden somewhere, is that the commissioner now can look at that party data sources to give you a tax liability. That means that they're not just relying on the data that you're giving them, they're also relying on the data of that parties that you're transacting with or even though you're not transacting with, that they are privy to that data, right? >> Right. >> Um so, you are going to see a lot of um taxpayers who've not been under the fold before now coming into the fold. And um I think the the message for all taxpayers is for them to know that in as much as the Revenue Authority has a mandate to collect taxes, you you're running a business, you also have a mandate to make profits, right? And those two mandates need to coexist, and the only way they can coexist for you as a taxpayer is for you to know your tax obligations. Otherwise, the Revenue Authority will come and let them be known to you when they are collecting the taxes. >> Right. >> So, there's no way out. Um that's the bad news. There's no way out. Yeah. >> Yeah. >> And and still in the Finance Act that's introducing a possible I don't know if it's Was it scrapped? I think Fiona at some point tried to paint perspective. That's reduction or relief from They gave a bracket of 30 Was it 30 >> K to 100 K. >> Uh if it was to be introduced or I don't know if it has been scrapped or how would it affect, let's say, average Kenyan Gen Z who is juggling between starting up an SME, that's a business, a startup fresh, or juggling between content creation and being employed, still going through pay as you earn. How's it going to affect their income? >> So, the idea of reduction of the the tax bands in terms of ensuring that the taxpayers who are employed take home more is to increase their disposable income. So right now if you look at the tax rate that we are using, they they are they are they are based on the law of equity. If you earn more, you are taxed a bit more. If you earn less, you also taxed a bit less. But when you look at the lowest band, the ones that are purported to be taxed less, what they take home is significantly kidogo even when you think about other than pay, you are also looking at NHIF and NSSF and all that. >> Yeah. >> So the idea to give a relief and the proposal was really can we give more disposable income to the, you know, the low income earners. And also that helps with the economy because, you know, the cash flow is a bit it improves with when people take home more. To my knowledge, it has not been changed. >> been implemented. >> Yes. Yes. So it was it was a promise but we are still waiting. >> to or hopeful to be or praying to be implemented. >> I don't say I don't think praying is the >> [laughter] >> is the right word. >> Yeah. >> But we are hoping. We are hoping that something can be done. >> Yeah. >> But also maybe you can sound off on the same too cuz the Gen Zs, millennials at large and everybody since everyone is a Gen Z. Everyone is all about juggling between hustles. At the same time you have a 9-5 but you want to have other things. But then when you look at the current cost of living, the talks is around on, you know, inflation is so high. Can you please make it lower the tax base a little bit so that, you know, we we have some sort of breathing space. It's not moving yet these talks are stagnant. What is happening? >> Ideally, according to many company policies, there's supposed to be a salary raise every every year to accommodate inflation cost. >> Oh, there's supposed to be a salary raise? >> There's supposed to be a salary raise every year. Actually, even [laughter] for >> Yeah. >> for the civil servants >> Right. >> every year there's normally an anticipation >> Yeah, I think for them recently they they updated on it. I actually saw that. >> Exactly, but it's it's something that is ethical to include in company employment policies because inflation is a constant always. It is always K. K is constant. So, since inflation is constant, it should be constant that every year salaries are raised just to factor in the aspect of inflation even if not proportionately. >> Yeah. >> But seeing as that is not always applied in every single company, then people are venturing into then let me try my hand at business on the side. But then when you try your hand at business on the side, you think that since now I have a side hustle and I've paid my taxes in employment, I I'm not obligated to pay anything more. >> Yes. >> But with the onset of digitization of taxes, we have tools such as e-tims. >> Yeah. >> Whereby the more business you get at some point you'll run into an e-tims uh requirement or an e-tims hurdle whereby you are now required to declare the sales that you've made to KRA and in real time. So, then that brings in the aspect of knowledge. That's why there's a huge knowledge gap and I know KRA is working uh to to bridge this gap between the tax man and the taxpayer of knowledge just to create awareness that these are the taxes that you are to pay if you are venturing into business, if you are venturing into any commercial venture. >> Right. >> But the part that is lacking is then empowering the taxpayer to take hold of their own taxes, not just relying on the tax man to tell them, but understanding that if I set up ABC, I will reduce my taxes by XYZ. And that's where professionals like Wairera and myself and many others are coming up to sort of empower the public so that they are able to move forth in in in contributing to the economy without fear and focus on their core businesses. >> Right, absolutely. And I want to just pivot to you, Adera. In this current economy we're living in, and right now even with the introduction of the finance finance act 2026, I was widely just thinking, is it possible to escape a tax are there taxes that you can escape? I know that's breach of law, or that's not being patriotic, it's actually legal. But maybe we can break it down fast. What are some of the common mandatory taxes that a Kenyan who is either on PAYE or pay as you earn, they have a 9-5, they're running a business, or they're into content creation, like it's super inescapable. Because all of us are hopeful what's in a deduct, but it's law here. Maybe we can break down some of the types of the taxes, and then maybe we can get into the bonds later, the brackets in terms of payments. >> Okay. Um I should start by saying I'm an advocate of the High Court of Kenya, so I can't help you legally escape taxes, >> Yes. >> but um to piggyback on what Fiona said, when you have a tax advisor, then you're able to read the law in black and white, and you're able to take advantage of opportunities that the law has given you, which um some people might not know until they read the law in black and white. So for example, when you think about PAYE, um there allowances of an employee that are enjoyable, but you can only uh enjoy them when you've read the law and you know how to apply them. Think of meal allowances. You're allowed, you know, to have meals, but they're capped to a threshold. Uh mortgage interest, you're allowed, but again capped to a threshold. Pension, so over and above your KRA payslip, there are other allowances that are hidden in there that you're allowed to take advantage of, but that's that's what you pay us >> Yeah. >> And that is what is called tax planning. So tax planning is legally using the law, and using the knowledge, and maybe loopholes to enable you to pay um just enough taxes that you should pay. And the word is you should pay. So you're only paying what you're legally supposed to pay. >> Right. >> Then there's what you said, escaping, which is tax avoidance, and it is illegal, right? >> Evasion. >> Um yes, tax tax evasion, which is illegal. Even avoidance right now it's becoming very illegal based on the act that we have. >> Yeah. >> So, tax avoidance is you have probably hired employees, you've deducted their PAYE, you have declared it on your iTax, but you failed to remit it. That's tax avoidance, right? Or you have structured your business in a way that the taxes that you're supposed to pay, so corporate tax, PAYE, um VAT, or excise, or import duties, you're not paying them. You're actually evading paying them based on the structure that you have. >> Right. >> Um from a legal perspective, that is actually a criminal offense. You can be prosecuted in a court of law >> Mhm. >> for that. And you can be sent to prison, um which I don't think we speak about enough. >> Mhm. >> And then there's tax um uh I've still talked about evasion, avoidance. So, tax avoidance sits between tax planning and tax evasion. It's in the middle. And the the the the thing about tax avoidance, the discretion of who decides whether a structure or a transaction is tax avoidance is KRA. >> Mhm. >> That's a lot of power, right? So, the commissioner can come to your business and look at your structure and tell you, "Based on how I've seen you've run things, what you're doing here is a tax an arrangement to avoid tax or to give you a tax benefit." >> Yeah. >> And one of the things that people should be really careful with the new Finance Act is the expansion of what is a tax benefit. >> Right. >> So, right now the powers of a commissioner to look at an arrangement, especially when you're dealing with offshore uh structuring, >> Yeah. >> call that this is a tax arrangement to give you a tax benefit, >> Yeah. Offshore offshore structuring though >> Offshore structuring is you you have a company in Kenya and you probably want to have a holding company in Mauritius >> Right. >> just because you want to profit shift the tax from Kenya to Mauritius or Delaware or, you know, Yeah. So, anything that you just the way I like to think the principle of it is if any tax is supposed to go to Kenya Revenue Authority and it does not go to them, they have a right to come and question ilienda wapi? Why didn't it not come to us? And that's the tax benefit that tax avoidance um kind of marries with. >> Yeah. So, an individual or a business, how do they navigate that if you are to put if you are to profile it? >> I would say um my rule of thumb as a lawyer is before you sign any contract, before you do any structuring, please seek advice on where the taxes sit. Because then you're you're you're structuring from an information perspective, not from an avoidance perspective, right? Because you can be looking at your structure and you're like, "Yeah, yeah, I'm going to save an X amount of money." But legally speaking, if KRA comes knocking, you're going to pay more than what you anticipated to save. >> Yes. >> Yeah. >> Right. Uh Fiona, uh there's a question that came through here, but I think maybe we can delve into that later. Maybe we can expand on some of the tax brackets or the tax bands and how it means. Um msemo ya kupata tax reprieve haiko, it's uncertain, we should pray about it. Uh can you maybe explain a little bit some of the taxes on VAT, PAYE, and the rest that it's a must like you can't live without that. Because so long as you're a Kenyan, in fact, there's somebody who said once you're born in this country, you're born with a tax debt, yeah? And now that our current public debt is at 13 trillion Kenya shillings. But let's bring it back to common conversation with the agency. The taxes that you're paying and maybe you should be aware of, follow it up and check up, and also make it accountable. Where is that money going to? Cuz most of the time is I or many deduct ni she on housing allowance. Okay, cool. You complain, but if you are to just pay a little bit of time, learn, and even listen to such a conversation, you get informed and you'll be at peace. So, let's break it down. >> All right. I'll start by saying a wise man once said there are two things in life that are sure of, taxes and death. That you will one day die and that you must pay taxes. So, taxes is inescapable, especially if you are operating on the correct side of the law. So, what are the taxes that young people ought to know about? The first one is pay as you earn. So, pay as you earn touches on everyone who is employed. Whereas whereby your salary is deducted before it hits your pocket. So, it's deducted on the gross amount that your contract states is the gross amount you should be earning. So, whatever deductions are made there are deducted by the employer and ought to be remitted to the Kenya Revenue Authority. But, you're you're recently seeing cases where employers have been deducting these taxes from employees and not remitting to the Kenya Revenue Authority, which only is disco- which is only discovered after the employees now filing their returns only to find that they have a tax debt in the system. And when you follow up with the previous employer, which are cases that I have encountered, and it's mostly with previous employers, then the the company was closed down or rebranded or was sold off to another uh owner, shareholder, director. So, it's creating a huge problem whereby you're left with the burden, yet you can prove that you paid. However, there are there are avenues like alternate distri- dispute resolutions whereby you can sit down with KRA. KRA is not a big bad wolf. KRA are human beings. It's a conglomerate of human beings who are >> do Kenyans fear KRA? >> Um >> Even businesses. >> Ambiguity. >> Especially audits, yeah. And you'll you'll tell us a little bit more about that, audits and fear and attitude. >> they fear KRA because there's a lot of ambiguity and and lack of understanding and we when it comes to KRA. And also the fact that KRA has a lot of power. You've seen KRA freeze accounts, shut down whole big businesses, multi-million businesses. And this brings a lot about a lot of fear and anxiety when you're dealing with the taxman because you know this person is more powerful than me. But, as a taxpayer you ought to understand that I have rights and there's a constitution and there's these laws that also protect my rights as a taxpayer, which is why we have avenues like ADR, alternate dispute resolution, whereby you can sit down and explain your case. KRA sending you a demand assessment or telling you that this is these are the taxes you owe us, pay us in 7 days or pay us in said number of days does not mean you ought to pay them if you have justification for why these figures are wrong. It's in your rights as a taxpayer. But if you're operating from a point of lack of knowledge, you will just be afraid. And you will start running around like a headless chicken, so to speak. But PAYE as you earn is the one that touches the most on on young people. on the average Kenyan. And then we also have taxes such as individual income tax, which is now deducted on a tiered basis, whereby the range runs from 10% to 35% and those are the bands that you're talking about. So if you earn between 0 and 24,000, then that is taxed at 10%. 10% of the maximum of that is 2,400. But then there's a personal relief of 2,400 for every Kenyan individual. Meaning that if you whatever you generate is 24,000, whether gross salary, net salary or profit, then you don't pay taxes because of that personal relief of 2,400. Have I lost you? >> No, I I I got it. I got the bigger picture. >> The second band is of course if you on the next 8,333, then just that portion is taxed at 25%. Then every anything above that to a cap of 500,000 is taxed at 30% and so on and so forth up to 35%. So as as Kenyans, they ought to know that, but beyond that, then that taxpayer also ought to know the avenues that are available for them to reduce on these taxes. And Wanjera has mentioned that very well with uh life insurances and the mortgages and the pensions. Those are opportunities for the employed person. But then you also have taxes like VAT. >> Yeah. >> And taxes like excise >> Excise duty taxes. >> excise duty taxes. And we also So VAT is levied on goods that are considered vatable above a certain threshold in terms of turnover. >> Yeah. >> threshold is 5 million >> Mhm. >> turnover in a year. If your commercial activity is generating over 5 million Kenyan shillings over a period of 12 months, then you ought to pay VAT if what you're selling is considered as a vatable good >> Mhm. >> according to the laws. >> Yeah. So, if you're to explain turnover to a janzie, how do you make it simpler? I understand that part if you have if your business or or you're running a franchise and it's making this amount of money, how do you bring it into perspective though? >> Turnover is just the amount of money that has entered your pocket before you deduct anything. >> Mhm. >> So, before you deduct your cost of acquiring the goods, any expenses you incurred, and overheads. >> Yeah. >> Just the money that hit your account, total. Gross. The gross revenue that you have generated. So, that is your turnover. >> Mhm. >> But then your turnover should be exclusive of the VAT. >> Mhm. >> Because you can't If you're supposed to levy a tax on the turnover amount on the turnover but the total turnover, you can't include a tax there because you will be taxing a tax. >> Yeah. >> Which is not legal. >> Mhm. Yeah. I remember the excise duty, there's a place where we talked about sin goods and the way janzie are all about that luxurious life. But yeah, it's low. Uh Wanjera you can help us understand how uh the the the legal aspect of the tax bands and the tax brackets. I know there's something with filing nil returns. What What is it called? Is it filler? Fi- fi- filler returns? I don't know what they call it. Maybe there's a different word, but you can correct me. Uh, what are the implications if you constantly file nil returns, but yet behind the business is booming, yeah? Or maybe you're employed, and maybe also the employer has not stated clearly. And also, why are audits a nightmare to young entrepreneurs? Especially even those that are in content creation. Somebody's earning some good money in the digital content creation space, and I understand there's the presence of that digital tax, yeah? So, if you were to expand it, what are the implications? What should you do? What should you anticipate? How does it go, yeah? >> It's a lot of questions. Uh, let me see what I can marry them together. So, I think the first one I'll just start with from uh what Fiona mentioned. Um, you know, as a taxpayer, you do have obligation to pay taxes, and you start your business to make a profit, like I said. And the Kenya Revenue Authority has a mandate to collect taxes. So, in in all circumstances, when you're filing your nil returns, just remember that there's someone who has a mandate to collect taxes. And as long as they have that mandate, then they will keep questioning uh patterns that make it look like you have stuck taxes to pay, but you're not paying them, right? So, um maybe to rephrase your question, I would say, "What are the triggers of audit in Kenya, as we've seen right now, right?" The first trigger I would say is I want to say patterns of transactions. >> Mhm. >> So, um I like when uh people give an example of your business is making over 5 million turnover, uh like Fiona has said, you have not registered for VAT. The first thing KRA is asking, "Why are you not registering for VAT?" And VAT is um taxes that belong to to KRA. They're not your taxes. >> Yeah. >> So, if you're buying like a tissue, VAT means that you sell your shoes at 2,000, then you add 16% for KRA. So, KRA is using you as an agent to collect for them taxes to your to your customers, right? So, you can see why they would be very Mhm. Why are you not collecting taxes? >> Question marks. >> for us. So, that's the first pattern. The other pattern that we see is your turnover is very high, but then your pay is zero. So, they might ask themselves, who is earning this money for the company if you have no employees, right? Um the other thing is your turnover is also very high in your banking analysis. So, your account statement, you have a lot of money, >> Yeah. But when they look at your iTax, >> you're always filing nil returns. Or you've been in a loss position for more than 5 years, or even for 5 years. You're a perennial loss um we can call them filer. You're always saying that you didn't make any profit. >> Yeah, that's the word I was talking about. Yeah, filer. >> Yes, but you're not shutting down. You in fact you're driving. You're driving a business. >> [laughter] >> But should But should you be having valuable property as a sign for you to be taxed? >> That's the That's the thing, um Brian. Like I said, mandate to collect taxes, mandate to make a profit. When you decide to go file loss, do it from a point of information and knowledge, not from a point of I don't want to pay. That cannot be your anchor, >> Like escaping, hiding, >> be your anchor. Yes. You can be in a loss position. We've seen businesses that are in a loss position and they're working really hard. It is not an unseen or unfathomable, but it cannot be you not You don't want to pay taxes. That cannot be your anchor. >> Yeah. >> Yeah. And why are audits, to your next question, a nightmare for Kenyans? I like to think of audits as you're only looking at your books because KRA knocked at your door. So, they've caught you unprepared. You don't know your tax exposure. You don't probably have records. So, they are telling you your narrative of how your business is run. It's not you telling them the story of how your business is run. >> Yeah. >> Of course you're going to panic. You're going to panic because when they realize you don't have records, when they realize you don't know the narrative of your business, they will hit you with an assessment. Whether it is bloated or not, they will hit you with an assessment. Now, you're looking at the number, you're looking at your bank account, the numbers are not numbering, right? Because you're looking at maybe your account, you moved 5 million, but KRA has jumbled PAYE, VAT, corporate taxes. You're looking at a higher number than the money that you've moved. And also remember, KRA never comes to audit you in 1 year in year 1. They will wait for 5 years because they are allowed to audit you for 5 years. So, instead of you looking at 5 million that you moved in 2025, you're looking at 5 * 5. So, that number is very panicking for anyone, right? And of course, the moment they panic, you don't strategize because it's human psychology. When you panic, you're not thinking of how do I defend my position, you're thinking of how do I navigate this position. And that's where, you know, the shortfalls comes in, yeah. Um, I think I've answered all the >> Yeah, absolutely. But, there's a trend as well in It's like maybe it's a formula or a tactical approach where KRA sometimes observes people's lifestyles and they I don't know if they make a conclusion or they form some sort of like, uh, what is a hypothesis and then boom, you hear a certain politician has been busted or a business is no longer operational. It has something a lot to financial institutions and even people that own bigger, you know, companies. So, maybe what would you recommend in terms of laws as well, especially when it comes to navigating that? And also, somebody would ask, who is susceptible or who is uh, potentially possible to be subjected to a tax audit? >> I would say, um, anytime you're running a business, an audit is a life cycle of a business. It's actually doesn't mean because the revenue authority is doing an audit on you that you've made a mistake. Sometimes they could just be verifying, they verify and they tell you, "Thank you for having us over. Goodbye." We've seen cases like that. But, when you're on the mistake, meaning you have not been doing the right thing, you don't know your tax obligation, you don't have the narration of your business, you don't have um you have tax exposures that you don't know. They'll be very happy to tell you. So, who's susceptible to being told that you've made mistakes? I think all the above that you've mentioned. For all the taxes that Fiona has narrated, if you're not asking yourself, is my business supposed to be registered for VAT? Have I qualified? If you're not asking yourself, am I remitting PAYE? If you're not asking yourself, am I importing things? Do I have Have I paid import duty on these things? >> Yeah. >> If you're not asking yourself, um you know, what are my overall um revenues in terms of profit and what tax is payable if any. And even aside from business, if you involve maybe in buying property, stamp duty and all that. Anytime you involve yourself in a commercial transaction, >> Mhm. >> every commercial transaction has a tax element, always. The element can be negative, it can be zero, or it can be plus one, but there is a tax element, yeah? So, as long as you're moving money in and out, then KRA can come knocking at your door. >> Right. Absolutely. I think if you've understood that part, say yes by the comment section on our on our question of the day. Uh back to you, Fiona. Uh she she mentioned about She's mentioned about transactions. They keep on coming even with I don't know if they've adjusted them them pesa transactions to as well. And I think in the Finance Act and the Finance Bill 2026, there's a place where they had mentioned there's a possible uh adjustment to the card that the interchange, especially in countries with foreign card, the Visa, MasterCard, etc. Cuz also with PayPal, cuz most Gen Zs and those in content creation or in the digital space, they're transacting with foreign uh companies. PayPal is there and many others. I believe Wise, etc. if you are to uh delve into that. What is the current reality on ground, especially with mobile money transactions and withdrawals with banks, etc. Because that touches on your money, bro. It touches on your money and I I think there's a time Was it PayPal? It has been a big conversation actually in Kenya. PayPal suspended a couple of accounts here in Kenya because they felt like pesa zilikuwa zina potea na hazijadedactiwa. And then of course KRA so now everything is observed and now with the finance act and what was suggested in the proposed, everything is being monitored. Somebody would say too much surveillance. Please, can you give me a little bit of privacy? Well, there I will say that is law, yeah? So, what is the current reality on ground? >> The current reality is that there are common reporting standards that cut across uh different countries, that cut across different uh jurisdictions. So, with these common reporting standards then countries are trying to put hands and heads together to avoid situations where tax taxes are being evaded. And in the plight to do that, which is the best way to as to to capture every transaction? Uh technology. Technology is the one way that we can all leverage on to capture every transaction, which is what you're calling surveillance. And we there are calling it a microscopic view into people's transactions. >> say predatory. >> Someone can say predatory, but someone else can say law. >> Mhm. >> So, it's all about uh in reducing the amount of taxes that we have lost as a country. And that is why the pressure is getting worse, so to speak, because the surveillance is getting better. You mentioned PayPal and and uh M-Pesa digital transactions. There's There's even a law that came out recently last year as it was ending to say that if you own a paybill and if you own a till number, then KRA has now has the right to demand for those statements just so that they can ascertain this is how much you have >> Has it gone through by the way? >> It is law. >> at least it had a lot of uproar, yeah? >> They have the right to demand for those records. So, if you are a business or a business person who does not involve themselves in reconciliation. And for me as an accountant, reconciliation is something that should be done daily to monthly. Daily, depending on the volume of transactions that you're getting. This is the only way to ensure that your audit is your audit trail is clear. Every amount that moved into your business has been accounted for, has been factored into your records, every amount that moved out is making sense and there's an end-to-end audit proof situation happening over there in your business. >> Right. >> So, the reality on the ground is that the more we are living we're living in an AI age. >> Yes. >> Technology will only get better. >> Actually, they said they'll be using AI to >> They've already started. They're even using GPS to track for for rental income. They're using GPS to track buildings that are not remitting rent as they should. So, technology is only going to get better. The best thing to do is to operate from a point of knowledge. To understand for my activities as myself and as this corporation or this this business >> Yeah. >> these are our risk areas in terms of compliance, this is how we have mitigated that and this is how we are aligned with the law. >> Yes, absolutely. Compliance is summary to that, too. But also, as we take a break, we are asking you if taxes were optional, would you still pay them and why? If taxes were optional, would you still pay them and why? When we come back as well, we'll be talking about the digital tax. Why is it eliciting uproar and is it a bigger conversation in the content creation space? The hashtag is a Pontsho Live TV Show at Y254 Channel at Brian Okoth 1. They'll tell us their handles at the end. Let's take a break. You're coming back in just a bit. Stay with us. >> [music]