u003cpu003eu003cstrongu003eRichard Ndungu0026rsquo;u, Partner and Head of Tax at KPMG East Africa, started as a public accountant in Kenya, in the 90s. He thus had the opportunity to witness the modernisation of the tax administration process in his home country and the whole East African region in the years that followed.u003c/strongu003eu003c/pu003eu003cpu003eAdaptability to change is the key to success for anyprofessional accountant. The careerpath of Richard Ndungu0026rsquo;u, holder of a Bachelor of Commerce from the University of Nairobi, Kenya u0026ndash; his home country u0026ndash; comes as a proof to that assertion. Indeed, hepresentlyoccupies the position of Partner and Head of Taxat KPMG East Africa. As hegraduallyclimbed up the professionalladder, Richard Ndungu0026rsquo;uwitnessed the economic changes East African countries underwentduring the last twodecades. He alsoobserved the impact of growth on the accounting profession as a tax expert working for an important advisory, tax and audit firm.u003c/pu003eu003cpu003eTwenty-five years ago, Richard Ndungu0026rsquo;u took his first steps in the accounting profession in Kenya. At that time, the Eastern African country was far from having what can be termed as a booming economy, he recalls. And since the economy was underdeveloped, the duties of an accountant were quite few and simple, by todayu0026rsquo;s standards. It should be noted that Kenya saw its economy expand by an average of 5.4 % between 2004 and 2015 and by 4.9 % in the first quarter of 2015.u003c/pu003eu003cpu003eBesides, in 1990, when Richard Ndungu0026rsquo;u started as a public accountant for PricewaterhouseCoopers, the Kenyan governmentu0026rsquo;s Income Tax Department (ITD) was attached to the Ministry of Finance. His fellow colleagues, accounting professionals working at the ITD, he explains, only had to look at the profits of companies that had already been audited, perform tax computation and convert the profits per accounts into income which was then subjected to tax according to tax rules. The same was practiced in the other Eas-tern African countries: Tanzania, Uganda and Rwanda.u003c/pu003eu003cpu003eHowever, when the Kenyan government began to encounter difficulties in obtaining large funds on the international scene, it was compelled to focus on its own domestic capacity to finance and fuel its national budgets. And so was born a sudden consciousness among public officials of the more active role an independent ITD could play, Richard Ndungu0026rsquo;u recounts.u003c/pu003eu003cpu003eMajor developments in the way the Kenyan government regulates its finances and raises funds took place at the beginning of the 1990s. According to Richard Ndungu0026rsquo;u, that period was marked by a u0026ldquo;u003cemu003eshifting away from the Income Tax Department doing assessment of tax payers to a self-assessment regimeu003c/emu003eu0026rdquo;. He adds that the first reforms took place in 1992 when self-assessment returns and personal identification numbers were introduced in tax administration. Then, in 1995, the Kenya Revenue Authority was created. It was the first national income tax revenue authority in Eastern Africa. The idea behind it was to consolidate the administration of all revenue acts under one umbrella body and the head of the authority in Kenya as well as the other Eastern African countries which followed became known as the Commissioner General.u003c/pu003eu003cpu003eThe Commissioner General obtained the assistance of senior commissioners for the administration of the different taxes, namely Value Added Tax and Income Tax. Tax payers were also stratified while the Large Taxpayers Office (LTO) was formed as an operations unit in 1998 to provide one-stop shop services in the administration of income tax and VAT matters affecting large taxpayers. All these measures were meant to improve the tax system as it was found that over 80% of all the taxes came from onlyu0026nbsp;20 % of the tax payers. Richard Ndungu0026rsquo;u tells us that with these changes, the attitude of tax officials towards tax payers became different as well: people were being treated as clients of the revenue authorities.u003c/pu003eu003cpu003eIn 2004, the East African Community Customs Management Act, which governs the customs treatment for five countries u0026ndash; Burundi, Rwanda, Kenya, Uganda and Tanzania u0026ndash;, was passed. This law further contributed to the consolidation of the regional taxation system. By that time, Richard Ndungu0026rsquo;u had joined KPMG as a Senior Manager in 1999 before being named Partner in charge of tax for East Africa in 2000. He would, from then on, be a closer onlooker of the regionalisation of tax administration.u003c/pu003eu003cpu003eAs a keen observer of the developments in East Africa, Richard Ndungu0026rsquo;u would play an important role at KPMG which also provides advisory services to clients looking forward to invest in the region. The new regional customs regulations resulted in a more rapid movement of goods along frontiers that had a positive impact on business. Internal tariffs were not imposed but rather a common external one for the five countries that joined in. Few taxes are now domestic, like excise duty or dumping duties for instance. This regionalisation of the tax system also meant a harmonisation of the top rate of taxes for individuals and corporate bodies which is 30% across the board.u003c/pu003eu003cpu003eThere was also the setting up of an East African Forum which, according to Richard Ndungu0026rsquo;u, is helping tax revenue authorities of the region to share information pertaining to export and import transactions. He considers developments such as these as vital for economic growth. An example he gives is that goods that reach the port of Mombasa (Kenya) only have to go a single transit before reaching Uganda so that businesses do not have to pay customs duties twice. Another example is the fact that member countries impose the same VAT rate. For Richard Ndungu0026rsquo;u, the last twenty years saw a u0026ldquo;u003cemu003esophistication of administration of taxu003c/emu003eu0026rdquo; in the region coupled with the training of high calibre officers in the United Kingdom.u003c/pu003eu003cpu003eThe modernisation of the tax system in the region affected the way accounting firms are recruiting, Richard Ndungu0026rsquo;u adds. More and more lawyers are being recruited as opposed to professionals with only an accounting background to deal with the increasingly technical and legal issues. The growing number of Double Taxation Avoidance Agreements is for a large part contributing to this new recruitment policy since 1999. u0026ldquo;u003cemu003eThere are details which have legal implications that are still being negotiated and one has to have a legal mind to see the wider implications because once a treaty is in force, it overrides domestic lawsu003c/emu003eu0026rdquo;, Richard Ndungu0026rsquo;u explains.u0026nbsp;u003c/pu003e
Richard Ndung’u : A keen observer of tax administration in East Africa
