Kenyans rush to file returns as KRA spells fines

As of June 20, about 3.8 million out of 6.1 million taxpayers had filed returns.

In Summary

•About 2.3 million Kenyans were yet to file returns 10 days to the deadline.

•The number is however 22.6% more compared to the 3.1 million who had filed their returns by the same period last year.

The KRA headquarters at the Times Towers/
The KRA headquarters at the Times Towers/
Image: FILE

Millions of Kenyans are rushing to beat today's deadline for filing tax returns with KRA warning of penalties for non-compliance.

While the taxman has enhanced the iTax system to handle the high traffic traditionally witnessed during last minutes, as it facilitates taxpayers to file returns, it will not spare those who fail to file their returns on time, it warns.

As of June 20, about 3.8 million Kenyans had filed their returns successfully, the taxman says.

This translates to about 62.3 per cent of the 6.1 million taxpayers in the taxman's database, meaning about 2.3 million Kenyans were yet to file returns 10 days to the deadline.

The number is however 22.6 per cent more compared to the 3.1 million who had filed their returns by the same period last year, which KRA marketing and communication Deputy Commissioner, Grace Wandera, attributes to stability of the iTax system.

The iTax system is currently very efficient, enabling taxpayers to file their returns 24 hours a day, without hitches,” Wandera said.

KRA has also extended its Service Centres and Contact Centre opening hours to serve the increasing footfall, she added.

More than 230,000 customers have been served at Huduma Centres and Service Centres, a 71 per cent jump compared to last year.

Individuals who fail to file income tax return on time face penalties of five per cent of tax that is due and unpaid under the return, or Sh2,000, whichever is higher.

For corporate entities, they face a penalty of five per cent (5%) of tax that is due and unpaid under the return or Sh20,000, whichever is higher.

While KRA is not focused on punishing taxpayers as it encourages everyone to to comply, thousands of taxpayers, both individuals and companies, have in the past failed to file returns on time, forcing the authority to enforce penalties.

Going by the number of tax returns that we have received so far, most taxpayers have heeded the call.However, there is equally a substantial number of taxpayers yet to comply,” Commissioner for Domestic Taxes, Rispah Simiyu, said last week.

The June 30 deadline applies to all individual taxpayers and business entities whose accounting period runs from January to December.

Individuals with employment income require P9 forms issued by their employers, to file their tax returns.

“Those with business income should have their books of accounts and financial statements ready for reference when filing their returns,” Simiyu explains.

Where no income was earned or generated during the period, a taxpayer is required to submit a nil return.

Filing tax returns is one of the taxman’s ways of netting tax cheats and growing the income tax segment, as it pushes to meet its tax obligation.

The process started on January 1, with the taxman expecting over five million taxpayers to file their annual income tax returns by today mid-night, with no extension expected.

Returns are a key component of tax compliance which KRA considers in the issuance of a tax compliance certificate (TCC).

Kenyans who fail to file risk being blocked from applying for jobs, open bank accounts or registering land.

Companies, learning institutions and self-help groups that fail to comply also risk being locked out of government services that require PIN numbers.

Meanwhile, the taxman continues to upgrade its systems while simplifying tax modules in the country to make it easy for taxpayers to comply, mainly on paying their requisite taxes.

According to chairman Francis Muthaura, KRA which last week launched its its eighth, three-year Corporate Plan, is banking on technology such as blockchain and artificial intelligence to help mobilise more taxes.

This, as it targets to raise Sh6.8 trillion in ordinary revenue over the next three years.

Commissioner General Githii Mburu has listed high net-worth individuals, the digital economy and real estate as some of the areas of focus for the taxman in its quest to increase its revenue offering to the exchequer.

It also plans to expand its tax base by tapping businesses in the Turnover Tax (ToT) regime, non-compliant businesses and professionals, with the number of active taxpayers expected to increase by at least two million, from 6.1 million to 8.2 million in the next three years.

Alternative dispute resolution also remains in KRA's cards as it seeks to address its differences with taxpayers in a friendly manner, away from courts, in resolving tax cases.

In the financial year 2020/21, 393 cases were resolved through alternative dispute resolution and 914 cases over the last corporate plan, unlocking Sh38.9 billion.

Treasury expects KRA’s target to go up to Sh2.5 trillion by the 2023/24 financial year, from Sh1.77 trillion in the next financial year starting Thursday, where betting firms are among the biggest target.

Last week, National Treasury CS Ukur Yatani urged KRA to bring the informal sector into the country’s formal tax base and reduce over-reliance on existing tax brackets.

“That is one critical area that we need to target. We should not be taxing the same people every other day. There is need to share the burden,” Yatani said.