KRA issues three-year tax amnesty for defaulters
The taxman has given individuals and businesses a three year window to apply for amnesty granted by the government.
The Kenya Revenue Authority (KRA) has opened a three-year tax amnesty window for individuals and businesses who have not been disclosing their incomes over the last five years to come forth.
Under the Voluntary Tax Disclosure Programme (VTDP) introduced through the Finance Act, 2020, tax defaulters will be granted a tax amnesty— waiver of interest and penalties— on the outstanding tax liabilities.
“Under this programme, taxpayers who have not been disclosing their incomes to the KRA for the last five years will be granted relief of penalties and interest on the outstanding tax liabilities,” said Mr. Stephen Kyande, KRA Acting Commissioner for Domestic Taxes Department.
The program, that builds on the success of the 2015/2016 tax amnesty to landlords for the 2013 and prior years that saw a boost in revenue collection and enhanced compliance levels, will run for a period of three years effective 1st January 2021.
“Just like any other tax amnesty, taxpayers who will come forth and declare their undisclosed incomes for the five-year period will not face be subjected to any legal process such as prosecution,” Mr. Kyande noted.
The taxman is encouraging defaulters who may have failed to comply in a given period of time and now hold their declarations back for fear of prosecution to come forth and take advantage of the minimum amnesty window granted by the government.
Although the voluntary tax disclosure programme will run for three years, how much of the interest and penalties will be waived will be dependent on the time taxpayers will make their applications. This means that the earlier the taxpayer makes their application, the greater the benefit from the amnesty programme.
“Taxpayers who will apply within the first year of the programme, that is, in 2021, will enjoy 100 percent waiver of interest and penalties on the outstanding tax liabilities. On the other hand, only 50 percent and 25 percent waiver of penalties and interest will be granted to taxpayers who will apply in the second (2022) and third (2023) years of the programme respectively,” Mr. Kyande clarified.
Taxpayers who will apply for this tax amnesty will be required to make full and true declarations of their undisclosed incomes to the commissioner.
“Once the commissioner is satisfied with the details provided in a given application, a relief of interest and penalties will be granted,” Mr. Kyande said. “The commissioner will then enter into an agreement with the applicant, setting out the terms of payment of the tax liability. Payment of the tax liabilities will be made within one year from the date of the agreement.”
Any taxpayer who will cheat in their application for the amnesty will forfeit any waiver granted and maybe prosecuted. It is therefore important for taxpayers to make true disclosures of their incomes.
VTDP, however, is not applicable for individuals and businesses that are under investigation.
“While all taxpayers with undisclosed incomes are welcome to apply for this amnesty, those under a tax audit, investigation, or are party to an ongoing litigation in respect of the tax liability, do not qualify to apply. The same applies to taxpayers who KRA has notified of a pending audit or investigation,” Mr. Kyande clarified.