AFRICA: Kenya’s authority to explore AI and machine learning to detect tax evasion

The Kenya Revenue Authority (KRA) intends to use technologies such as Artificial Intelligence (AI) and Machine Learning to analyse massive amounts of data and detect patterns of tax evasion.

According to Humphrey Wattanga, KRA Commissioner General, adopting application programming interfaces (APIs), artificial intelligence (AI), and machine learning will improve revenue collection by making it more efficient, accurate, and compliant.
“AI and Machine Learning will analyse vast data sets to identify tax evasion patterns, optimise resource allocation, and predict future revenue streams. Ultimately, integrating technology will not only boost tax collection but also foster trust and transparency within the tax system,” Wattanga said during the 2024 KRA Annual Summit.

Kenya’s Prime Cabinet Secretary, Musalia Mudavadi, stated that tax administrations should use technology to facilitate trade and improve domestic resource mobilisation.

He added that adopting electronic invoicing systems helps to integrate the informal economy into the formal tax base, widening the scope for domestic resource mobilisation.

Over time, the Kenyan government and KRA have used resources to combat tax evasion by using systems like iTax and the Integrated Customs Management System (iCMS) to ease tax filing and customs clearance.

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A 2022 report revealed that 90% of Kenyan companies did not pay corporate tax. Of the 759,164 registered firms, only 84,428 paid their taxes for the year ending June 2022, resulting in a compliance rate of 11.12%.

This call for AI deployment is consistent with Kenya’s move to lead in the technological wave and leverage AI for digital growth.

In April 2024, the Kenyan government and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH collaborated to launch a project to develop a National Artificial Intelligence (AI) strategy.

Toward the launch of the AI Strategy, a meeting among stakeholders was held to identify gaps and opportunities within Kenya’s AI ecosystem, explore ongoing initiatives and partnerships, set priorities for the National AI Strategy, and gather feedback on the strategy’s development.

In September 2024, Kenya announced plans to update its ICT policy for the first time in 26 years. The country’s ICT Sector Working Group (SWG) submitted a key report to the Ministry of Information, Communications, and the Digital Economy on policy and legislative reforms to align Kenya’s ICT environment with global trends.