In a move to clamp down on tax evasion, the government is turning to the very technology that has become second nature to most Kenyans—mobile money. By December 25, 2024, mobile paybill and till numbers will be transformed into virtual Electronic Tax Registers (ETRs), ensuring that businesses can’t sidestep the taxman anymore. This decision is part of a wider strategy to boost revenue collection, targeting traders who have flown under the tax radar for too long.
This significant announcement was made during a tax summit by Moses Kuria, senior economic adviser to President William Ruto, and former Cabinet Secretary. Kuria, never one to mince words, confidently declared that the transition would expand the tax base, leaving little room for tax dodgers to hide.
“We’ve agreed with the Commissioner-General that come Christmas 2024, all paybills will also be virtual ETRs for the purposes of [tax collection],” Kuria said, adding with a hint of sarcasm, “I know there is going to be some noise, but I also want you to tell me where we agree that someone will not pay taxes? Maybe I missed that point.”
His point was clear: businesses, particularly those operating via platforms like Safaricom’s M-Pesa, can no longer expect to avoid their tax obligations. As it stands, while over two million companies in Kenya rely on mobile paybill services, only a measly 200,000 are registered with physical ETRs. That’s a staggering gap and a glaring lost opportunity for tax revenue. The shift to virtual ETRs is designed to change that—starting with businesses pulling in more than Sh5 million in annual sales.
Kuria’s announcement plays into a larger effort championed by President Ruto, who has long pointed to the vast, untapped potential of Kenya’s mobile money ecosystem. With millions of Kenyans transacting via their phones daily, the digital frontier presents a clear pathway to plugging revenue leaks. The Kenya Revenue Authority (KRA) is already busy working on integrating its systems with mobile service providers to root out income tax evaders.
Essentially, mobile money transactions will soon function like the country’s Electronic Tax Invoice Management System (eTIMS), meaning the government will be able to track sales and calculate taxes more efficiently. This move couldn’t come at a better time, as the government faces mounting pressure to raise funds. After all, public protests earlier this year forced them to roll back several tax measures proposed in the Finance Bill 2024. The Treasury is looking for ways to make up for that shortfall, and the mobile money tax plan could be just the ticket.
While the plan is likely to cause a stir—especially among smaller traders who rely heavily on mobile transactions—it marks a necessary shift towards better accountability. And in the era of digital banking, integrating tax collection with mobile platforms seems like a natural next step. Christmas might come with a few more “gifts” than usual this year, but for the taxman, the real gift will be more efficient collections.
