This week the Standard is reporting that Kenyann Treasury is pushing for an exemption that would allow the Kenya Revenue Authority (KRA) to access sensitive personal data, such as property details and bank accounts, without a court warrant. This initiative aims to enhance efforts in catching tax evaders.
Proposed Amendments to the Data Protection Act
Treasury Cabinet Secretary Njuguna Ndung’u has proposed amendments to the Data Protection Act, 2019, through the Finance Bill. These amendments would grant the KRA unrestricted access to sensitive information held by various data controllers and processors, including banks, telecom operators, utilities, schools, land registries, and the National Transport and Safety Authority (NTSA). The Finance Bill, 2024, also suggests integrating the databases of these data controllers with the KRA’s digital system, i-Tax.
Legal Concerns and Opposition
Legal experts have raised concerns about these proposals, describing them as “worrying.” The proposed amendments to Section 51(2) of the Data Protection Act would add a new paragraph allowing the disclosure of personal data if necessary for tax assessment, enforcement, or collection. Currently, the Act allows data sharing only for personal or household activities, national security, or public interest, and requires a court order for accessing private information.
KRA’s Current Enforcement Strategies
The KRA has been leveraging various databases to identify suspected tax evaders. These include bank statements, import records, motor vehicle registrations, Kenya Power records, water bills, and data from the Kenya Civil Aviation Authority (KCCA). Additionally, car registration details and Kenya Power meter registrations help the KRA identify landlords and individuals with high-end vehicles who may not be paying their fair share of taxes.
Debate Over Privacy and Legal Procedures
Nicholas Abidha, an advocate of the High Court, questioned why the government prefers giving the KRA absolute access to personal data through the Data Protection Act rather than amending Section 60 of the Tax Procedures Act. This section, which requires a court order before accessing personal data, was previously declared unconstitutional but reinstated by the Court of Appeal in 2020. Bob Mkangi, a constitutional lawyer, argued that the proposed amendments undermine the constitutional requirement to protect privacy unless probable cause is determined by the courts.
Enhanced Data Management and Reporting
The Finance Bill also proposes amending Section 59A of the Tax Procedures Act to allow the KRA to establish a data management and reporting system. This system would receive electronic documents and detailed transaction data. Non-compliance with this requirement could result in a penalty of Sh2 million for every month of breach.
Government’s Revenue Strategy
This proposal is part of the 2023 Medium Term Revenue Strategy, through which President William Ruto’s administration aims to increase tax collection to Sh2.95 trillion by the end of June next year. In terms of tax collected as a proportion of annual economic output, Kenya has been underperforming compared to other nations like South Africa.
