Why you should file your tax returns on time

Worldwide, a good tax compliance score is a fundamental aspect for smooth running of any business or profession. Contrary to popular belief, tax compliance is not entirely defined by payment of taxes only.

Filing of tax returns is equally an important aspect that grants a taxpayer a clean bill of health with respect to tax compliance. A tax return is a declaration made to the Commissioner of the income earned or generated over a given period.

Where no income was earned or generated during the period, a taxpayer is required to submit a nil return. Filing of tax returns is a key tenet of tax compliance which the Kenya Revenue Authority (KRA) considers in the issuance of a tax compliance certificate (TCC).

With only a few days left to the deadline of filing the 2020 annual tax returns, we are in the homestretch phase of this important exercise. Going by the number of tax returns that we have received so far, most taxpayers have heeded the call.

By mid-June, KRA had received more than 3.6 million tax returns which translates to a 25 per cent increase compared to the returns that had been submitted over a similar period last year. However, there is equally a substantial number of taxpayers yet to comply.

The June 30th deadline applies to all individual taxpayers and business entities whose accounting period runs from January to December. Individuals with employment income require P9 forms issued by their employers, to file their tax returns. Those with business income should have their books of accounts and financial statements ready for reference when filing their returns. KRA has continuously made deliberate efforts to simplify the process of filing tax returns for enhanced user experience.

Submission of tax returns is done online on KRA’s iTax platform (http://itax.kra.go.ke). Taxpayers with employment income only can now use the simplified web based pre-populated income tax return, labelled ‘ITR for employment income only’ on iTax to file their returns.

To further simplify tax processes, KRA has also introduced a mobile phone application known as M-service which enables taxpayers to access various services offered by the Authority such as taxpayer registration, filing of returns and payment of taxes. Taxpayers who did not have any income last year can use the M-service application to submit a nil return.

-The writer is the Commissioner for Domestic Taxes at KRA.