Kenya Revenue Authority Data Warehouse

Sida has supported the Data Warehouse and Business Intelligence (DWBI) Project at the Kenya Revenue Authority (KRA) since 2014.  The project is implemented by KRA.  Sida has provided SEK 35 million, of which 4.7 million has yet to be disbursed, and the Government of Kenya and Danida have provided additional funds. In related support, the Swedish Tax Agency (STA, Skatteverket) and KRA received SEK 44.7 million to cooperate 2014-2019 (contribution 511177) and are currently receiving SEK 5.4 million for a final period of cooperation 2020-2022 (contribution 13011). An independent evaluation (Greg Moran, Anders Jansson, and Jack Ranguma, Evaluation of the Sida-supported development cooperation with the Kenya Revenue Authority, Sida Decentralised Evaluation 2019:26 (2019-10-16)) found that the support was relevant, was completely aligned with key Government and KRA policies and strategies at the time and with the Swedish Cooperation Strategy 2009- 2013. Regarding effectiveness, the procurement of DWBI was beset by problems from the outset and the entire process was significantly delayed. Although a revised Phase 1 was been completed by late 2019 and some progress had made by KRA towards Phase 2 (with the capacity built by STA), problems were anticipated in finalising Phase 2: Business Intelligence Reports and Dashboards. In the associated project, STA provided significant institutional development for the DWBI from the very beginning. As a result of this support, considerable capacity had been built both within the department responsible for the data warehouse and amongst those responsible for risk management, and now that Phase 1 of the procurement was complete, significant levels of data were being produced and shared for analysis and risk management. At the time of the evaluation, the project was efficient, i.e., the DWBI costs appeared generally well justified by results, even though the DWBI had yet to become fully functional. Recognizing that it is probably too soon to determine impact and that it is difficult to attribute changes at the impact level to any one programme, the following observations are made: There has been a significant increase in revenue collection over the duration of the programme. There has been an exponential growth in the tax base according to the data from KRA. Although the data provided by KRA with regard to tax compliance is confusing, it does appear that there has been a significant increase in compliance across all of the different types of taxpayers. As regards sustainability, impressive levels of capacity enhancement were reported so much so that KRA staff were capable of implementing nearly half of what was required for Phase 2 by late 2019. However, questions have been raised whether maintenance of the system was adequately provided for at that time. The evaluation recommended that Sida engage more in the support to the project and consider final support to KRA in the areas of business intelligence and analytics. Since the time of the evaluation, Sida has made a no-cost extension of its support to the DWBI Project and launched a new support to via STA (contribution 13011 Swedish Tax Agency/Kenya Revenue Authority 2) to reap the full benefits of the DWBI Project. The project is being implemented in three phases: Risk Profiling and Case Management, which was completed in January 2019; Business Intelligence Reports and Dashboards, which is 70% completed; and Advanced Analytics, which is only 10% completed. The last two phases were to be finished by June 2021, but KRA terminated its contract with the implementing consultant and procured a new consultant to finish the project - the contract was signed in October 2021. This entailed a need to extend the agreement with KRA to December 2024. KRA has identified the following impacts of the DWBI Project thus far: Data quality improvement: Through data profiling, data gaps such as duplicate PINs, inaccurate telephone/email contacts, and incorrect economic classification of taxpayers have been identified. This has led to both process and source systems improvements to stop data inaccuracies. Additionally, a dedicated project team has been established to engage affected taxpayers and institute long term treatment to ensure good quality data. Enhanced productivity: Initially the process of sourcing for the data used to take 80% of data analysts time, leaving only 20% for analysis. Data sourcing has now been automated, reducing the time taken to source for data by 60%. Analysts therefore have more time and spend more effort in value adding service of analysis as opposed to data hunting. In addition, automated risk profiling and case selection means that tax officers spend more time in pursuing revenue rather than collecting data and carrying out compliance checks. Compliance facilitation and revenue mobilization: A single view of the taxpayer from the perspective of the Domestic Taxation Department and the Customs and Border Control Department has been achieved and has been instrumental in creating a taxpayer risk profile. Cumulatively, a total of 38 business rules/risk parameters have been developed in the risk engine. Two risk parameters were rolled out in March 2020 leading to selection of 45 cases for audit. 25 of these cases have been completed and have raised a total revenue of KES 5 million. Consequently, over Ksh 1,035,672,796 billion assessments has been raised for the period December 2020-June 2022 from profiled cases resulting in Ksh. 196,655,172 million realized through various payments. Governance and system enhancement: As a result of DWBI risk profiling, the risk management function has been enhanced with the DWBI solution becoming a strategic tool to facilitate this. To this end, the Domestic Taxation Department (DTD) structure has been augmented by a Compliance Risk Management Committee tasked with development, review of risk parameters, and case selection. In order to facilitate a seamless and transparent process for case monitoring, an integration between the Data Warehouse and iTxs (DTD source system) was implemented to ensure that the identified cases are fed back to the source system. The Data warehouse extration and transformation tool are also being used to synchronize employees data with iTax to prevent fraudulent input claims.

The objectives with the support to DWBI are the same as for the institutional collaboration between the Kenya Revenue Authority and the Swedish Tax Agency (contribution 51110077), i.e., increased tax revenues, tax base and level of compliance with tax regulations through: 1) Improved data on and analysis of the tax payers; 2) Increased efficiency in the tax administration; 3) Identification and treatment of risks; 4) Increased customer focus.