Software firm touts automation amidst tax shortfalls

January 9—Business owners across East Africa are being advised to limit scrutiny of their Pay As You Earn (PAYE) compliance and avoid possible penalties imposed by the relevant revenue authorities by adopting  automated solutions.

Giving Kenya and Tanzania as examples, Nikki Summers, the Regional Director for Sage in East Africa, said last week, the tax collection authorities in both countries are scrutinising more closely whether employers are complying with their tax obligations.

She said, “Without improving tax collection, East African countries will not be able to effectively finance the building of infrastructure and the provision of public services. We are seeing Tanzanian and Kenyan tax authorities take a more robust approach to registering tax payers and enforcing compliance to help the governments meet their tax collection targets.”

This means that businesses must ensure that they declare the correct earnings for all employees and that they include the right taxes and statutory deductions in payroll calculations.  It has become increasingly important to ensure that annual returns are filed and submitted promptly and accurately to the relevant tax authorities.

With a tax collection shortfall of KES40 billion, (nearly $390 million) in the first four months of the 2017/18 fiscal year—which ends in June —the Kenya Revenue Authority can be expected to take a tough line on enforcement in the months to come. What’s more, the Treasury is currently reviewing the Income Tax Act with a view to increasing revenue, improving tax administration and sealing tax loopholes.

In Tanzania, PAYE accounts for about 17% of gross tax accounting for the biggest share of tax revenues. This is due to increased focus on controlling of revenue leakages in recent years.

Summers said in a statement, “Business builders don’t go into business because they love filing tax returns. Using automated payroll software can help them save dozens of hours a year, because they no longer need to worry about doing manual calculations or returns. Plus, they can rest easy knowing that automation reduces the possibility of human error. Payroll software takes the pain out of compliance, allowing business owners to focus on business strategy, customers, and employee engagement rather than on red-tape.”

She said because compliance is complex and the risks of non-compliance are high, East African businesses can no longer rely on spreadsheets and other manual methods to do their calculations and file returns. Automated solutions are becoming more essential for keeping reliable records and performing accurate payroll calculations.

“Without improving tax collection, East African countries will not be able to effectively finance the building of infrastructure and the provision of public services. We are seeing Tanzanian and Kenyan tax authorities take a more robust approach to registering tax payers and enforcing compliance to help the governments meet their tax collection targets,” she said.

This means that businesses must ensure that they declare the correct earnings for all employees and that they include the right taxes and statutory deductions in payroll calculations.  It has become increasingly important to ensure that annual returns are filed and submitted promptly and accurately to the relevant tax authorities.

Sage is involved with the technology that helps businesses of all sizes manage everything from money to people – whether they’re a start-up, scale-up or enterprise. Their main vehicle is the Sage Business Cloud that accommodates accounting, financials, enterprise management, people/payroll and payments/banking.

 

 

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