CHANGING TACK

KRA banks on tax disclosure deal to widen tax base

The programme only applies to a disclosure resulting in payment of taxes

In Summary
  • The Kenya Revenue Authority has pinned hopes on new taxes and waivers introduced to shore up revenues in an economy hit hard by the pandemic.
  • The programme which was introduced vide the Finance Act, 2020, became operational on January 1, 2021 and will run for three years to December 31, 2023.
Kenyans rush to beat the June 30 deadline for filing tax returns at Railway Club, Nairobi, on June 29, 2020.
Kenyans rush to beat the June 30 deadline for filing tax returns at Railway Club, Nairobi, on June 29, 2020.
Image: DOUGLAS OKIDDY

The Kenya Revenue Authority is banking on the Voluntary Tax Disclosure Programme introduced this year to boost tax compliance.

KRA's Chief Manager policy and advisory Margaret Masaku said this is an olive branch extended to those economically hit hard by the Covid-19 pandemic.

“Above 95 per cent of the revenue we collect every  year comes from voluntary declaration/ self assessment therefore this programme has been put in place to help those who may have fallen off paying their taxes get back to compliance,” said Masaku.

She said that it was more of a future oriented programme aimed at raising more revenue in the future by allowing people pay their past dues without penalties and interests.

“Our aim is to facilitate the majority of our tax payers back into the tax paying net as we noted the penalties and interests have been posing a challenge on getting back,” said Masaku.

KRA's Deputy Commissioner Policy and Tax Advisory, Domestic Taxes Department, Caxton Masudi said the Voluntary Tax Disclosure Programme is  a way of lowering cost of compliance.

This programme is an olive branch extended to Kenyans who were economically hit hard by the Covid-19 pandemic
Margaret Masaku, Chief Manager policy and advisory, KRA

The Kenya Revenue Authority (KRA) has pinned hopes on new taxes and waivers introduced this month to shore up revenues in an economy hit hard by the Covid-19 pandemic.

KRA missed its revenue target by over Sh186 billion since March, when the virus was first reported in Kenya, according to data for the eight months to November 2020.

The taxman however closed the calendar year 2020 on a high note after surpassing its December target, posting an improved revenue performance rate of 101.3 per cent.

The improved performance was attributed to the economic recovery following the relaxation of the stringent Covid-19 containment measures and enhanced compliance efforts by KRA in the period.

The taxman in 2020 collected Sh166 billion against a target of Sh164 billion, representing 3.5 per cent growth over the same period last year.

KRA in October last year introduced a mobile application as part of its efforts to simplify and enable taxpayers to conveniently access tax services.

Looking ahead and with the ongoing implementation of the post Covid-19 Economic Recovery Strategy 2020-2022, revenue performance is expected to accelerate within forecast rates.

The number of Kenyans filing tax returns is projected to jump 25 percent to 5.5million this year, helped by ongoing campaigns on voluntary disclosure, according to a local daily.

The VTDP which was introduced vide the Finance Act, 2020, took effect  on January 1, 2021 and runs for three years to December 31, 2023.

It will grant relief on penalties and interest on any tax liability disclosed in respect to the period of 5 years running from July 1 2015 to June 30 2020.

Taxpayers who comply will receive full or partial waiver of the penalties and interest, depending on the time of payment of disclosed taxes.

KRA clarified that the programme only applies to a disclosure resulting in payment of taxes. 

Persons shall not be granted relief which may result into a refund of taxes paid on or before the VTDP window or which may lead to an increase in their tax credit or loss carried forward.

Kenya Revenue Authority staff assist members of the public rushing to beat the midnight deadline in filing tax returns at the support centre at the Nairobi Railways Club on June 30, 2016.
IT'S ONLY FAIR: Kenya Revenue Authority staff assist members of the public rushing to beat the midnight deadline in filing tax returns at the support centre at the Nairobi Railways Club on June 30, 2016.
Image: FILE