Kenyans are set to start paying taxes on per diems, overtime, and leave pay after the Kenya Revenue Authority (KRA) commenced a crackdown on companies under-declaring their payrolls.

KRA targets a raft of employee benefits and perks running into billions that have been paid to star employees and not subjected to the 30 percent Pay As You Earn (PAYE).

This comes days after official data uncovered an additional 230,935 workers earning above Kes 100,000 monthly who were not captured in State filings, raising fears of tax evasion.

The Kenya National Bureau of Statistics (KNBS) revised the pay data for 2.9 million Kenyans employed in the formal sector for the four years to 2020 after it emerged that firms have been omitting some regular perks while reporting the workers' payroll.

Therefore, the taxman has threatened firms with penalties of up to 25 percent of the evaded tax if they fail to report the hidden allowances.

Further, KRA wants the firms to inform it of perks such as telephone allowances, dinner cash, per diems over Kes 2,000 per day, and non-cash benefits like gym fees above Kes 3,000 monthly.

In a notice sent to employers on December 6, the taxman is also pushing the companies to declare workers' private expenditures like payment of school fees, insurance, and utility bills that the employer met.

“The commissioner may impose a penalty…if you fail to deduct tax upon payment of emoluments to an employee,” the notice read.

Kenya committed to the International Monetary Fund (IMF) to recover unpaid taxes from high-net-worth professionals and traders to raise national revenues.

The taxman is flagging wealthy individuals who have been hiding their sources of income while engaging in luxury spending and property accumulation, including purchasing homes and big cars.

The revision of payroll filings by the KNBS saw those earning over Kes 100,000 monthly jump from 79,909 captured in 2020 to 310,884, outing over 230,000 top earners whose firms have been under-declaring their salaries.