Taxpayers to get relief of penalties, interests on undisclosed taxes

Kenya Revenue Authority (KRA) has offered taxpayers a relief of penalties and interest on undisclosed taxes for the last five years.

This will be effected through the Authority’s new Voluntary Tax Disclosure Programme (VTDP) which is aimed at improving tax compliance through disclosure of unpaid taxes and providing relief to taxpayers during the challenging economic times brought about by Covid-19 pandemic.

Last year, KRA missed its tax collection target by Sh186.3 billion since March when the country reported its first case of coronavirus.

KRA’s Commissioner General Githii Mburu said the taxman collected Sh1.09 trillion against a target of Sh1.28 trillion in the eight months to November.

The VTDP which was introduced vide the Finance Act, 2020, became operational on January 1, 2021 and will run for three years to December 31, 2023.

It will grant relief on penalties and interest on any tax liability disclosed in respect to the period of 5 years running from July 1, 2015 to June 30, 2020.

Taxpayers who comply to the programme will receive full or partial waiver of the penalties and interest, depending on the time of payment of disclosed taxes.

Persons who make full payment of disclosed taxes in 2021 will get 100 per cent relief while those who pay in 2022 and 2023 will get relief at a rate of 50 per cent and 25 per cent respectively.

“VTDP applies to all tax liabilities accrued or derived in the specified period including individual Income Tax, Corporate Tax, PAYE, Withholding Income Tax, Capital Gains Tax, Value Added Tax, Withholding VAT, Excise Duty, Monthly Rental Income Tax and Turnover Tax,” said KRA in a press statement.  

In addition to the waiver of penalties and interest, the Authority said that a person granted relief under the programme shall not be prosecuted for the disclosed tax liabilities.

“Further those granted relief in accordance with the provision of the VTDP shall not appeal or seek any other remedy with respect to the taxes, penalties and interest remitted by KRA. The settlement of taxes under the programme will be executed through an agreement with the Commissioner and taxpayers are encouraged to ensure compliance with payment agreements contained therein,” said KRA.

Taxpayers are allowed one amendment of the original declaration of return at any time before the lapse of agreement.

Relief under the programme shall only apply in respect to a disclosure resulting in payment of taxes. Taxpayers will be issued with a VTDP certificate, which will serve as evidence that the person took advantage of the programme in relation to the taxes specified in that certificate.

Exclusions

A taxpayer will not be eligible to apply for relief under the programme if he/she is;

a) Under audit, compliance verification or investigation

b) Has been served with a notice of intention to investigate or carry out an audit or compliance check for the undisclosed tax

c) Is a party to an ongoing litigation in respect to the tax liability or any matter relating to the tax liability.