The end of the tax-year is looming in Kenya and Tanzania, challenging businesses across the region to accelerate their efforts to comply with the laws and regulations around the collection of pay-as-you-earn (PAYE) tax and the submission of tax returns.
“Companies have only a few short weeks to get their houses in order. With tax authorities across the region taking a strict line on tax compliance, businesses of all sizes must ensure that they declare correct earnings for all employees and that they include the right statutory deductions in payroll calculations. Those that do not meet their obligations could face substantial fines and penalty interest,” says Nikki Summers, Regional Director for Sage in East Africa.
With the Kenyan Revenue Authority (KRA) falling short of its tax collection target for the year, it is expected to take a tough stance on non-compliance. It is targeting Sh56.6 billion lost through tax evasion from 152 cases presented in court since July, for example. The Tanzanian Revenue Authority, meanwhile, has ambitious tax collection targets and has invested in technology and awareness programmes as part of its effort to widen the tax base.
“Tax authorities in East Africa are under pressure to collect more revenues under sometimes difficult economic conditions,” says Summers. “Governments need more money to invest in infrastructure investment and to spend on social services,” says Summers. “As tax authorities continue to tighten their processes and digitise their systems, it is becoming harder for individuals and companies to escape the tax net.”
The quickest, simplest and, ultimately, most cost-effective way for companies to ensure full compliance with payroll tax laws is to automate the payroll with modern software. “Using spreadsheets and other manual systems is time-consuming and less accurate than automated software,” says Summers.
Cloud-based payroll solutions – available for small and medium businesses and larger companies – make it easy to generate reports and calculate relevant taxes. Software makes it simpler to keep track of changes to tax regulations that impact the payroll, such as changes to the tax bands or changes to calculation of statutory deductions.
“By automating payroll processes, companies can save many hours of manual work, freeing up time to focus on growing their businesses and serving their customers,” Summers says. “Payroll should not be a chore – it should be a seamless, error-free process that makes it simple to breeze through your pay run each month.”