1. KENYA REVENUE AUTHORITY BUSINESS INTELLIGENCE OFFICE PRESENTATION INVESTIGATION & ENFORCEMENT DEPARTMENT SYMON YATICH 29 TH - 31 ST AUGUST 2012

2. INTRODUCTION Kenya Revenue Authority (KRA) goals and objectives: - Revenue collection. “Watch dog” role at entry and exit points. Enforce Compliance with the various revenue Acts.

3. INTRODUCTION Cont’d  Forms of risks affecting achievement of KRA goals. 1. Intention: Deliberate ( willful) vs Inadvertent 2. Source: Internal Vs. External 3. State: Existing Vs. Potential (Emerging)  Business Intelligence Unit was created to manage these forms of risks.

4. THE ROLE OF THE INTELLIGENCE UNIT Role of the intelligence unit: a)Gather market information and financial trends for sector- based analysis b)Identify sources of risks affecting the achievement of the KRA goals c)Develop and monitor mitigation strategies to minimize the frequency and impacts of the identified risks.

5. DEFINITIONS OF INTELLIGENCE The activity of transformation of diverse bits of information into something of strategic value for the organization. The product of all relevant data and information that has been collected, analysed and interpreted into meaningful information for the relevant decision maker. It includes the processes and technologies to support the collection, storage, analysis, sharing and use of knowledge in decision making

6. MANDATE OF INTELLIGENCE UNIT To detect/Identify the various risks to revenue. Gather intelligence/information on their impact across the Authority’s operations. Analyze and advise the Management/policy makers, on the appropriate course of action/measures required to counter/neutralize the risk.

7. SOURCES OF INFORMATION Internal - Departmental Databases External - Informers, Govt Agencies, Private sector, Other intelligence agencies, Regional Revenue Agencies, Media, Internet, Libraries/Archives etc. Proactive - Information obtained through research and real time intelligence activities. Reactive - Makes use of available data, Management concerns etc.

8. METHODOLOGY Review and understand the operations of the project sector. Establish the level of compliance of the sector with respect to tax law. Identify the risks to revenue that apply to the sector. Identify the non compliant players in the sector. Make recommendations to management as to any legislative and technical changes necessary to counter the risk Disseminate accurate and timely operational intelligence of non compliant players to relevant enforcement arms.

9. BUSINESS INTELLIGENCE FRAMEWORK WHY DATA ANALYSIS Measure of business performance so as to administer specific industry schemes and trade measures Development of strategies to meet organizational goals. Short term tactical decision evaluation. Analytical Activities include:- Identification of information requirements. Assessment of the credibility and relevance of information. Inference from the current set of information. Understanding the meaning and implications of information Communicating that information.

10. BUSINESS INTELLIGENCE ( BI) Characteristics of a Business intelligence. o Comprehensive, cohesive, integrated tools and processes. o Capture, collect, integrate, store and analyze data. o Generate information that support decision making. Framework that allows business to transform:- o Data into information. o information into knowledge. o knowledge into wisdom.

11. BUSINESSS INTELLIGENCE PROCESS DATA WISDOM KNOWLEDGE INFORMATION Internal External Sector profiles. Individual profiles Business trends. Legislation Rules and guidelines Tax compliance levels What is the knowledge gap? What is the nature of information needed? Which data sources provide the information needed?

12. BUSINESS INTELLIGENCE ARCHITECTURE Components - People, data, processes, technology, system interaction. Focus – Strategic and technical use of information. Multiple tools – Integrated system. Decision support data.

13. Information/data Received External Information Internal Information Initial evaluation Information sufficient Report to source More information Close NO YES NO Case registration Case allocation Risk based evaluation Sector analysis Approval Disseminate Intelligence Feedback Report Intelligence summary YES Indepth analysis

14. Analysis of the information Analyze and process the information and data gathered. Establish patterns and trends of risk behavior. Identify/profile the risks, frauds, key promoters and perpetrators of the schemes and outline their modus operandi. Rank/ prioritize the risks/schemes so identified in order of tax importance. Evaluate the risks so identified for their financial scope, magnitude and impact across the operations of KRA, etc.

15. Dissemination to end-users Disseminate accurate, comprehensive and timely intelligence.  Strategic Intelligence to advise the policy makers as to any legislative action needed to counter the risk.  Tactical Intelligence to advise Management on the various administrative measures to neutralize the risk and the most efficient way to deploy the scarce resources to achieve maximum intended impact.  Operational intelligence on the organizations/individuals involved in the schemes in order to minimize the audit/investigative time.

16. Feedback Mechanism Feedback is important, as it will foster improvement and change. This will be sought from the stakeholders and other users of intelligence. A clearly defined feedback mechanism needs to be in place. Through Lotus notes e-mail and internal memoranda.

17. Work Done The unit has gathered intelligence and profiled the following sectors: Oil/petroleum sector Spirits sector Motor vehicle Rental/property sub sector

18. Dissemination Methods Internal memoranda Lotus notes e-mail (intranet) In house bulletins On request In house periodical publications

19. CONCLUSION There are four gaps that cause shortfalls in tax administrations  Unregistered taxpayers  Registered but non filers  Tax evaders  Tax defaulters  Through cooperation from all stakeholders, the Intelligence Unit is committed to alleviate some of these problems associated with these gaps.