The government raises revenue to finance its expenditures through taxation of business income and from gains made by persons. In Kenya, the Kenya Revenue Authority (KRA) is the body in charge of tax collections, and through different laws, there are provisions e.g., the Tax Procedure Act that levies penalties for taxpayers for non-compliance. A majority of Kenyans in the past have found themselves not complying with basic tax filing and ended up getting penalized. However, with the extension of the tax amnesty period by the Finance Act 2024, there is room for reprieve for taxpayers to take advantage. The government through the Tax Procedures (Amendment) Act, 2024 introduced a tax amnesty to give taxpayers an opportunity to apply for an amnesty of penalties, interests and fines that have been accrued for the period up to 31st December 2023.
What is a tax Amnesty?
A tax amnesty is a limited-time period offered by a government through an Act of Parliament e.g. the Finance Bill allowing individuals or businesses to pay and settle outstanding tax liabilities they owe the Kenya Revenue Authority without facing penalties, interest, or legal consequences.
It is a limited period when taxpayers are given a chance to pay what they owe to the tax man, and the penalties and interest they would have been charged are forfeited or forgiven on condition they pay the outstanding principal tax that belongs to the government.
It is typically aimed at encouraging voluntary tax compliance by offering taxpayers a chance to declare unreported income or settle unpaid taxes under favourable terms.
The Tax Amnesty under the Tax Procedures (Amendment) Act, 2024
The Tax Procedures Act 2015, under Sec 83(1) outlines the penalties for a person (definition extends to natural persons -partnerships, corporates, trusts etc. ) for late submission and failure to submit tax returns.
Over time a majority of Kenyans – Resident taxpayers and Foreigners- Non-Resident taxpayers have either out of information, ignorance or rushing to file last minutes have found themselves penalized for not meeting the June 31st deadline for filing Income tax returns. In addition, any tax not paid on time accrues interest and this has hindered a majority of individual taxpayers and businesses and the opportunity to obtain a tax compliance certificate.
Missing a tax compliance certificate, a vital document that shows a taxpayer’s compliance with the tax authorities. This has been detrimental to individuals and businesses that need to have the TCC to meet a job offer or bid for a business tender, even where the penalties arise out of reconciliation and not failure to file or pay tax.
What does the KRA Tax Amnesty Window offer to taxpayers?
Are you a KRA PIN number holder?
Did you know whether you are a Kenyan -Resident Income Taxpayer or a Foreigner – Non-Resident Taxpayer, earning income or not; the tax laws – Tax Procedures Act 2015 Sec24 require a person to file tax returns, failure of which penalties are levied as per Sec 83.
If you have not been filing your tax returns, whether business or personal taxes, the tax amnesty provides an opportunity for you as a taxpayer to take advantage to file and pay any due principal tax before 31st June 2025 for you to get a 100% waiver off the penalties and interests.
Highlights of the KRA Tax Amnesty as per Tax Procedures (Amendment) Act, 2024
The tax amnesty will be applicable :
- Penalties and interest accrued for a period up to 31st Dec 2023.
- The taxpayer has to pay the principal tax in full on or before 30 June 2025
- Where a taxpayer is unable to make a one-off payment for the outstanding principal taxes will be required to apply to the Commissioner for amnesty and propose a payment plan for any outstanding principal taxes, which should be paid by 30th June 2025
KRA Tax Amnesty on Corporates – Foreign Companies and Non-Resident Taxpayers
The amnesty also applies to Foreign Companies that have KRA Pins and foreigners who have KRA PINs as well.
Our firm offers tax services tailored to this niche of clients who may not be conversant with the local regulations and requirements whereas we also offer other services beyond taxation. Subscribe to our membership for these services here
Conclusion
It is important as you explore how to take advantage of the tax amnesty period to get help from professional tax expiates who will not only help with the application for the amnesty but also offer value-added services.
At our organization, a licensed and Authorized KRA Tax Agent we offer comprehensive tax services that include a tax health check, advisory, tax planning and liaison with the tax authorities as your tax agent.
Get in touch with our team for a limited free consultation on how you can take advantage of the amnesty period window to get compliant. You can email us, send us a WhatsApp message or call our official number to get assistance.
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