Taxpayers will now get full or partial relief of penalties and interest on undisclosed taxes for the last five years. The Kenya Revenue Authority (KRA) announced on Monday.
According to the taxman, this will be effected through the newly introduced Voluntary Tax Disclosure Program which is aimed at enhancing tax compliance through disclosure of unpaid taxes.
The Voluntary Tax Disclosure Program (VTDP) introduced via the Finance Act 2020 commenced on 1st January 2021 and will run for three years to 31st December 2023.
KRA’s move comes even as the authority struggles to find more ways to raise revenues from Kenyans still reeling from the economic effects of COVID-19 which is still rearing its ugly head up to date.
VTDP seeks to grant relief on penalties and interest on any tax liability disclosed in respect to the period of 5 years running from 1st July 2015 to 30th June 2020.
Taxpayers who comply with the plan will receive full or partial waiver of the penalties and interest, depending on the time of payment of disclosed taxes.
Persons who make full payment of disclosed taxes in 2021 will get 100% relief in penalties and interest while those who pay in 2022 and 2023 shall get relief at a rate of 50% and 25% respectively.
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.
“In addition to the waiver of penalties and interest, a person granted relief under the program shall not be prosecuted for the disclosed tax liabilities. Further those granted relief in accordance with the provision of the VTDP shall not appeal or seek any other remedy with respect to the taxes, penalties and interest remitted by KRA.” Commissioner For Domestic Taxes Rispah Simiyu said in a statement on Monday.
The settlement of taxes under the program will be executed through an agreement with the Commissioner.
Taxpayers will be allowed one amendment of the original declaration of return at any time before the lapse of agreement.
There is a caveat.
A taxpayer will not be eligible to apply for relief under the program if they are under audit, compliance verification or investigation, have been served with a notice of intention to investigate or carry out an audit/compliance check for the undisclosed tax or are party to an ongoing litigation in respect to the tax liability or any matter relating to the tax liability.
Further according to the taxman, relief under the program shall only apply in respect to a disclosure resulting in payment of taxes.
Taxpayers will be issued with a VTDP certificate, which will serve as evidence that the person took advantage of the program in relation to the taxes specified in that certificate.