The Kenya Revenue Authority (KRA) intends to provide training for experts in computerized auditing, aiming to extract information from taxpayers’ computers like concealed accounts and erased files in order to detect instances of tax evasion.
As per information shared with the International Monetary Fund (IMF), the Treasury has revealed that KRA will complete the training of these specialists and enhance their proficiency in advanced Microsoft Excel methods by the conclusion of June of the following year. This initiative forms a part of the KRA’s endeavors to enhance and modernize the skills of its auditing staff.
By June of the upcoming year, there are plans to establish audit quality assessment teams across all Nairobi Tax Service branches, with the goal of elevating taxpayers’ adherence to regulations.
An unnamed senior representative from KRA elaborated on this action, highlighting its purpose of boosting the tax authority’s capability to thoroughly examine both physical and digital records of taxpayers, ensuring their complete fulfillment of financial obligations.
The source affirmed, “KRA is dedicated to reinforcing the capabilities of regional audit hubs to effectively conduct audits and applying data-driven strategies for managing compliance risks. This is to guarantee that each taxpayer contributes their rightful portion of taxes.”
The majority of the evidence collected by KRA during its investigations has shifted to a digital format, encompassing items like emails, text messages, videos, audio recordings, images, and various transactional data stored on hard drives. This shift has necessitated the emergence of computer audit experts.
KRA is aiming to uncover tactics such as renaming files with innocuous names or changing file extensions to disguise content, in an effort to expose these strategies.
Cracking down on such offenses generally requires sophisticated methods of data collection, analysis, and extraction.
In addition to providing training, KRA is emphasizing the reinforcement of its data analytics capabilities, focusing on reconstructing digital transactions and offering insights into intricate dealings. This utilization of data and analytics will involve the “implementation of advanced analytics and specialized models for identifying fraud and managing risks.”
This recent initiative from the tax authority, coupled with the proposal to establish a digital forensic lab, is set to unsettle those who have been exploiting the digital underworld to evade taxes.
Last May, KRA initiated a search for a consultant to establish a lab dedicated to forensic acquisition, extraction, and e-discovery of materials. This move is intended to enhance the agency’s capacity to perform effective intelligence gathering and investigations, building strong cases against tax evaders.
As individuals and businesses increasingly transition from paper-based accounting to electronic record-keeping, traditional methods reliant on paper trails face challenges in identifying tax evaders.
KRA has outlined that the lab will feature a forensic memory analysis tool capable of delving into concealed files, recovering deleted data, uncovering user actions, retrieving passwords, accessing hidden disk sections, and locating files with misleading names.
However, given the rapid evolution of technologies like cloud computing, which allows data storage on the internet through cloud computing providers, KRA must devise strategies to stay ahead. Retrieving such data from a third party like KRA might encounter obstacles due to varying data protection regulations in different jurisdictions.