TAX OFFENCES AND PENALTIES

Tough penalties awaits tax offenders - KRA

In Summary

• Taxpayers are required to maintain any document required under a tax law to enable liability to be readily ascertained.

Dr Edward Karanja, DC Investigations and Enforcement Department, at KRA.
Dr Edward Karanja, DC Investigations and Enforcement Department, at KRA.
Image: COURTESY

Kenyans who obstruct KRA officers from  carrying out their duties under the tax laws risk being fined up to Sh1 million or going to jail for up to three years.

In a tax investigation framework handbook released by KRA on Wednesday, the authority said investigations will be undertaken with or without taxpayers' cooperation.

KRA said  taxpayers' conduct and cooperation during the course of investigations will be taken into consideration when the Commissioner determines the appropriate outcome and recommendation for waiver of penalties and interest.

The law allows KRA officers to obtain information, specifically the power to have full and free access to all land, buildings, places, records, data and documents, KRA said

The officers may inspect all goods, equipment, devices and records, whether in the custody or control of a public officer, or of a body corporate or of any other person, and may make extracts from or copies of those records.

According to the tax investigation framework, failure to provide information (including third party information) constitutes an offence under revenue laws.

You are also required to maintain any document required under a tax law to enable your tax liability to be readily ascertained.

"In this regard you are required to retain the document for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law , " added KRA

Common Offences people make that warrant TAX Investigation 

Kenyans commit several tax related offences without their knowledge.

Some of the offences include:

 Failure to register or deregister for tax purposes will lead to a penalty of Sh100,000 per month but not more that Sh1 million

Failure to retain records and documents will make the tax man penalise you 10 per cent of the amount payable to which the document relates. Where no tax is payable for the reporting period, Sh100,000 shall apply as the penalty.

Omission of income from returns, under declarations of income, or deliberately defaults on an obligation imposed by a tax law will land you a fine of Sh10 million or double the tax evaded, whichever is higher or  imprisonment for a term not exceeding 10 years, or both. 

KRA further says assisting a taxpayer to create a tax avoidance scheme, or abetting or aiding a taxpayer to evade tax will leave you with a fine equal to double the tax evaded or to a fine not less than Sh5 million whichever is higher or to imprisonment for a term not exceeding five years, or  both.

Other offences that will see you be investigated for tax offences include; Failure to maintain documents during a reporting period, failure to submit tax return or other document by due date, failure to pay tax, omission of income from returns, failure to comply with a notice issued under Section 42 among others.