KRA Waives Penalties, Interests on Undisclosed Taxes

The Kenya Revenue Authority (KRA) has announced a relief on all penalties and interest to tax payers on undisclosed tax arrears for the last five years.

KRA said that the move is aimed at improving tax compliance through disclosure of unpaid taxes and providing relief to taxpayers during these challenging economic times under its new voluntary tax disclosure program (VTDP).

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

Persons who comply to the programme by disclosing their tax arreas will receive full or partial waiver of the penalties and interest, depending on the time of payment of disclosed taxes.

The relief program applies to all tax liabilities accrued in a specified period including individual income tax, corporate tax, pay as you earn (PAYE) and withholding income tax.

KRA General Commissioner James Mburu. Photo/Courtesy

“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.”

“Persons who make full payment of disclose charges in 2021 will get 100 per cent relief in penalties and interest while those who pay in 2022 and 2023 shall get relief at a rate of 50 and 25 per cent respectively.” said KRA in a press statement.

The taxman further said that a person granted relief under this programme shall not be prosecuted for the disclosed tax liabilities.

Tax payers are expected to enter into an agreement with the Commissioner of Domestic Taxes on the settlement of disclosed tax liabilities.

“In addition to the waiver of penalties and interest, 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.”

KRA offices in Nairobi’s Times Tower. PHOTO | COURTESY

“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,” added KRA.

However, persons under investigations over tax non-payment including parties under litigation are not eligible for the relief program.

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