Economy

KRA amnesty nets Sh5.8bn as tax cheats rush to comply

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Times Tower in Nairobi, the headquarters of Kenya Revenue Authority (KRA). Picture taken on Thursday, October 15, 2020. PHOTO | DENNIS ONSONGO | NMG

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Summary

  • The taxman netted Sh5.89 billion in the first full year of an amnesty programme that cushions tax cheats from penalties and legal suits.
  • The Kenya Revenue Authority (KRA) Thursday disclosed that 1,311 firms paid Sh5.76 billion by December 31, with the rest coming from individual taxpayers.
  • The taxman said firms and individuals declared Sh8.572 billion under the amnesty programme dubbed Voluntary Tax Disclosure Programme (VTDP) in the period under review.

The taxman netted Sh5.89 billion in the first full year of an amnesty programme that cushions tax cheats from penalties and legal suits.

The Kenya Revenue Authority (KRA) Thursday disclosed that 1,311 firms paid Sh5.76 billion by December 31, with the rest coming from individual taxpayers.

The taxman said firms and individuals declared Sh8.572 billion under the amnesty programme dubbed Voluntary Tax Disclosure Programme (VTDP) in the period under review.

KRA started the three-year programme on January 1, 2021, and is betting on the amnesty to shore up revenue collections and bring more individuals and firms to the tax bracket in the war on evasion.

“Total payments received from the processed applications for the period January - December 2021 amount to Sh5.892 billion,” KRA said in responses to Business Daily yesterday.

KRA documents show that 711 businesses and 600 individuals applied for the amnesty last year with more expected to come forward and declare their unpaid taxes before the programme lapses in 2024.

Under the programme which will run up to 2023, those who declare pending liability and pay within one year shall enjoy 100 per cent interest and penalty waiver.

Businesses and individuals who disclose and pay the pending tax liability within the second year of the programme will receive remission of 50 per cent while payments that come in the third year will have 25 per cent relief.

The taxman targeted Sh5 billion in the first year of the amnesty programme that hopes to entice Kenyans to disclose undeclared taxes for the period between 2015-2020.

Businesses and individuals who are under investigation or who had cases before the tax appeals tribunal or courts before January 1 when the programme started have, however, been locked out of the amnesty window.

Individuals and firms are not eligible to apply for relief under the programme if under audit, compliance verification or investigation.

They will also not be eligible if they have been served with a notice of intention to investigate or carry out an audit or compliance check for the undisclosed tax.

KRA opened the amnesty window a year after its intelligence gathering team revealed some 1,309 firms and wealthy individuals with an estimated tax loss of Sh259 billion, highlighting the dire effects of tax cheats in revenue collection.

VTDP will see businesses and individuals shielded from stiff penalties that include travel bans, collection of duty directly from their suppliers and bankers and prosecution— the penalties for tax evasion.





KRA automated the amnesty programme in July last year allowing tax defaulters seeking reprieve from heavy penalties to apply through the iTax portal.

The automation ended a six-month period of a tedious manual application process that was said to be slowing down efforts to rope in more businesses and individuals.

KRA raised Sh1.67 trillion in the period ended June last year and is banking on the amnesty to collect Sh1.9 trillion in the current financial year.

The amnesty programme marks KRA’s latest onslaught on tax evasion, a war that is pegged on increased intelligence gathering and roping more businesses and individuals into the tax bracket.

High-net individuals whose flashy lifestyles do not match their meagre tax filings and landlords form another key plank in the onslaught on tax evasion.

The taxman is flagging wealthy individuals that have been hiding their sources of income while engaging in luxury spending and accumulation of property, including the purchase of homes and big cars.

KRA has been using various databases to pursue suspected tax cheats, among them bank statements, import records, motor vehicle registration details, Kenya Power records and data from the Kenya Civil Aviation Authority (KCCA), which reveal individuals who own assets such as helicopters.

The taxman is also beefing up the Intelligence and Strategic Operations unit of the KRA— tasked with detecting tax evasion schemes — will get 110 additional staff in the three years to June 2024 in efforts to raid tax cheats.