Tax Collections in Times of Ongoing Pandemic in Kenya: Challenges and Policy Options
5 Pages Posted: 2 Jul 2020
Date Written: June 30, 2020
COVID-19 pandemic is presenting unprecedented crisis, primarily of health and human tragedy but has also far reaching economic ramification. The crisis is disrupting millions of people’s livelihood, with severe impact on business and especially small and informal businesses. Across the Globe governments are taking decisive actions to protect their economies and affected sectors. One such sector that is likely to be disrupted is the process of tax collection and administration. Although we are in the early stages of the potential impact, tax agencies must focus and prioritize their response in order to make the most of the limited time and resources available.
To address these needs and help inform the responses, this paper presents
- An analysis of COVID-19 impacts on the collection of various forms of taxes, in which the paper postulates that although reduction of tax collected is to be expected across the board, income tax and corporate tax are likely to be hit hard due to combination of factors such as job losses, pay reduction and filing of net losses.
- Challenges expected to be faced by the tax agency in collecting tax during ongoing pandemics, the paper argues that tax agencies are likely to encounter several challenges including reduction in tax compliance, disruption to tax filing schedules, reduction in the ability to collect tax and complications arising out of adopting to the government economic stimulus.
- A framework for policy response by the tax agency and the government to mitigate the challenges. These Policy actions are drawn from a global scan of interventions implemented by various agencies and governments. The suggested responses include increase tax payer assistance, clear communication and making use of digital platforms.
The paper concludes by sending clear message that tax agencies and government needs to double down their efforts to safeguard their tax base and help their tax payers cope with the uncertainties brought by the current pandemic.
Keywords: Tax, Revenues
Suggested Citation: Suggested Citation