Access Bank Kenya has been fined Sh91 million for delayed transfer of tax collections in the financial year ended June 30, 2024, to the Kenya Revenue Authority (KRA), new disclosures show, pointing to the steep price of late remittances to the taxman.
The taxman disclosed the figure in the 2023/2024 annual report, which it says that the bank delayed transferring taxes to the KRA as a collection agent as required in law.
Tax agents are entities that, by law, are required to collect taxes on behalf of KRA and remit them within the specified time. The agency taxes are payable by third parties and it is therefore the responsibility of the agent to collect, declare, and remit.
“In the financial year 2023/2024, the Authority received a total of Sh91,048,745 from Access Bank being payment for penalties incurred due to delayed transfers of revenue taxes to the KRA collection accounts at CBK,” said KRA.
The Sh91 million penalty is a blow to Access Bank Kenya, which has been in a loss-making position, closing nine months ended September 2024 with a Sh581.33 million net loss compared with Sh61.53 million net loss posted in the preceding similar period.
The Tax Procedures (Amendment) Act, 2024 provides for various penalties for taxpayers and tax agents who fail to remit taxes within the specified time.
According to the Tax Procedures (Amendment) Act, 2024, a person who fails to remit the amount of the withheld tax to the KRA by the fifth day of the following month is liable to a penalty of 10 percent of the amount not remitted.
The KRA has been going after agents over delayed remittance of tax. Last year, SBM Bank Kenya disclosed that it was fighting off a Sh737 million tax penalty from KRA. The amount relates to an agency contract the taxman had with Fidelity Commercial Bank (FCB), which SBM Group, a Mauritian lender, acquired in 2017 and renamed SBM Bank Kenya.
The lender disclosed that KRA was demanding the amount as penalties on taxes that were collected by FCB on behalf of its customers in 2016. The amount was collected under a service-level agreement between KRA and FCB.
SBM said the taxes amounting to Sh239.29 million were collected before the 2017 transaction in which the Mauritian lender acquired FCB. The collected amount, SBM said, was fully paid to KRA upon the takeover.
However, SBM said KRA raised a Sh737 million demand notice a month after the transaction, saying the amount related to accrued penalties to FCB on unpaid taxes the acquired lender had collected from its customers but delayed to remit.
SBM disputed the claim and filed a case in the High Court seeking temporary protection against enforcement of the claim by the KRA as well as seeking direction by the court for the dispute to be resolved through arbitration.
