The Kenya Revenue Authority (KRA) has called for a fresh approach to engaging micro, small and medium enterprises (MSMEs), citing rapid technological changes and the growth of digital commerce.
Speaking during the Nation Media Group MSMEs Conference and Expo, KRA Board Chairman Ndiritu Muriithi said many businesses are increasingly operating online without physical premises, making traditional methods of identifying and formalising businesses less effective.
“Many businesses today operate online. Requiring them to have a physical location may no longer be practical because they can be everywhere and nowhere at the same time. As a tax administration, we must rethink how we engage with such enterprises,” Muriithi said.
Digital Commerce Changing Business Landscape
According to the KRA chair, the rapid growth of online businesses and digital platforms is reshaping how commerce operates across Kenya.
This shift is forcing tax authorities to reconsider traditional approaches that often rely on physical locations and conventional business structures to identify and register taxpayers.
Muriithi noted that KRA is increasingly focusing on citizen engagement, simplified tax processes and the use of technology to make it easier for taxpayers to understand and meet their obligations.
He added that most taxpayers are willing to comply when tax systems are clear, accessible and easy to use, although a small number deliberately avoid compliance.
MSMEs Key to Kenya’s Economy
Also speaking at the conference, KRA Commissioner for Micro and Small Taxpayers George Obell highlighted the critical role MSMEs play in Kenya’s economic growth and employment creation.
Despite their importance, he noted that the sector’s contribution to national tax revenue remains relatively low.
This imbalance, he said, places pressure on a relatively small group of compliant taxpayers and underscores the need to expand participation in the tax system.
“Expanding participation in the tax system is not only a fiscal priority but also an issue of fairness and shared responsibility among all economic participants, including MSMEs,” Obell said.
KRA Introduces Simplified Compliance Tools
To support smaller enterprises, the Kenya Revenue Authority has introduced several initiatives aimed at simplifying tax compliance and improving access to services.
One of the key tools is the Simplified Payroll Tool, designed for small businesses with only a few employees.
The tool allows such businesses to process payroll and meet tax requirements without the additional cost of hiring professional accountants.
“When a business employs three or five people, asking them to hire another accountant to manage payroll can be expensive. That is why we have rolled out simplified tools to support them,” Obell explained.
Focus on Engagement Rather Than Enforcement
Obell said KRA will continue engaging MSMEs through industry forums and stakeholder events to better understand their operational realities.
He emphasized that the future of tax administration will rely more on technology, partnerships and voluntary compliance rather than coercive enforcement measures.
“The tax service of today and the future is based on helping citizens understand that the state cannot function without taxes and that contributing through taxation is part of our shared responsibility,” he said.
The authority has encouraged MSMEs and other Kenyan citizens to embrace tax compliance as a civic duty, noting that tax revenues support infrastructure development, public services and long-term economic growth.
