June 30 deadline for amnesty requests on tax debt

Times Tower

Times Tower, Kenya Revenue Authority headquarters in Nairobi. The Finance Bill 2023 proposes to amnesty from penalties, interests, or fines on tax debts paid before December 31, 2022.

Photo credit: File I Nation Media Group

The Treasury has proposed a June 30, 2023 deadline for tax defaulters to pay up on the principal taxes as a precondition for consideration for an amnesty on fines, penalties, and interest on their accrued debt.

The newly published Finance Bill 2023 proposes to amnesty from penalties, interests, or fines on tax debts where a defaulter had paid all the principal tax due before December 31, 2022.

“Where all the principal tax had not been paid before December 31, 2022, a person shall apply Commissioner (Kenya Revenue Authority) for an amnesty of interest, penalties or fines on the unpaid tax, and propose a payment plan for the outstanding amount,” the Bill said in part.

The Treasury proposes that the amnesty shall however only be granted if the outstanding principal tax dues are cleared by June 30, 2024.

“The amnesty shall only be granted once if the person applies for amnesty and pays all the outstanding principal taxes not later than June 30, 2024, does not incur a further tax debt, and signs a commitment letter for the settlement of all outstanding taxes that the person may owe” the Bill proposes.

The Treasury proposes interest and penalty charges for dues not cleared by June 30, 2024.

“Despite subsection (2), where a person has paid part of the principal tax due on December 31, 2022, and had been granted an amnesty on the unpaid principal tax, and interest, penalties, and fines thereon, any amount that remains unpaid on June 30, 2024, shall attract interest and penalties for which no amnesty shall be granted under this section,” it said.

The taxman early this year collected at least Sh9.07 billion from the second phase of a tax amnesty programme that ended on December 31, 2022, after 752 additional defaulters voluntarily declared unpaid taxes.

Under the programme, which became effective in January 2021, defaulters who declare pending liability and pay within the first year shall enjoy a 100 percent interest and penalty waiver.

Businesses and individuals that disclose and pay the pending tax liability within the second year of the programme were to receive a remission of 50 percent while payments that come in the third year will have 25 percent relief.