The Kenya Revenue Authority (KRA) has started waiving penalties for people who defaulted paying taxes over the past five years, as it seeks to net more revenues to fill a gap deepened by the Covid-19 pandemic.
The agency on Monday announced that taxpayers will now get full or partial relief on penalties and interest on the undisclosed taxes, in a programme that runs from January 1 to December 31, 2023.
The Voluntary Tax Disclosure Programme (VTDP) was introduced through the Finance Act, 2020 and seeks to grant relief on penalties and interest on any tax liability disclosed in respect to the period between July 1, 2015 and June 30, 2020.
“VTDP applies to all tax liabilities accrued/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,” KRA Commissioner for Domestic Taxes Department said in a statement.
The taxman also said the programme is part of providing relief to taxpayers, due to hardship brought about by the Covid-19 pandemic.
The type of relief a taxpayer gets will, however, depend on how soon they pay, with the first ones most favoured.
“Persons who make full payment of disclosed taxes 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 per cent and 25 per cent respectively,” the authority said.
It also added that those who take advantage of the programme will not be prosecuted for disclosed tax liabilities.
Those under audit, investigation, compliance verification, or who have been served notice of intention to perform such will, however, not benefit from the programme.
“A taxpayer will not be eligible to apply for relief under the programme if he/she is a party to an ongoing litigation in respect to the tax liability or any matter relating to the tax liability,” KRA said.
Those who disclose and pay the taxes will also be issued with a VTDP certificate to prove they took advantage of the programme, the authority stated.
The move comes as KRA struggles to expand its tax base despite an underperforming economy.
In December 2020, it said it had missed revenue collection targets by Sh186.3 billion between March and November as the economy reeled from the impact of the pandemic.
KRA also started implementing the digital service tax on January 1, targeting 1,000 businesses.