The Kenya Revenue Authority(KRA) projects that about 2.8 million taxpayers will get automatic waivers for accrued interest and penalties amounting to Sh230 billion at the end of the ongoing 10-month tax pardon in June 2024.
The beneficiaries will be companies and individuals who have paid principal taxes for the period ending December 2022, according to KRA guidelines for the partial amnesty which opened in September.
“In the sensitisation, we have heard about taxpayers who only have penalties and interest outstanding and who will get automatic amnesty,” said Caroline Rotich, chief manager in the Domestic Taxes Department at KRA.
“So we have about 2.8 million taxpayers with about Sh230 billion, which will be waived for them.
“[There] are taxpayers who only have penalties and interest outstanding who will get automatic amnesty.”
The Ruto administration has under the Finance Act 2023 extended the pardon on accrued penalties and interest, which applies automatically for taxpayers who have cleared all the debts owed for the period ended in December, while those with pending bills are required to apply.
Those applying for the amnesty will be required to pay the outstanding debts in whole or propose a payment plan, which should be honoured by the end of June for the bills to be waived.
The outstanding amount is part of the estimated Sh1.4 trillion debt that KRA says it is owed by taxpayers within the Domestic Taxes Department, which handles income and value-added taxes.
“Some of the cases are in courts, and so we are not able to collect from them,” said Ms Rotich.
“There are some, which have issues that need to be sorted, probably [tax] return amendments and other issues that have made us not able to collect these taxes in the past.”
About 17, 000 taxpayers with principal tax arrears of Sh10.1 billion had applied for the tax amnesty since the window opened in September by the start of last week and had paid Sh3.4 billion.
The remainder of Sh6.7 billion for those who had already applied should be cleared by June 2024 for the debt forgiveness on penalties and interest to apply.
The taxman has, however, warned it will take enforcement measures on taxpayers who default on payment plans under the amnesty in a bid to crack down on abuse of the process.
The taxman targets to collect Sh51 billion from the tax pardon for taxpayers with outstanding principal debts for the period ended December 2022 in return for a wrote-off of the accrued penalties and interest upon payment.
President William Ruto, who has ordered KRA to “collect every shilling due”, has backed the partial relief on unpaid taxes under the amnesty programme to help noncompliant taxpayers to become compliant.
“This initiative alleviates financial burdens and aligns with our commitment to a fair and inclusive economy. Taxpayers with principal tax debt incurred before January 1, 2023, can therefore take advantage of this opportunity,” Dr Ruto said on September 11.
“The amnesty programme assists taxpayers facing financial challenges related to unpaid taxes, thus fostering economic growth and inclusivity for all Kenyan citizens.”
The taxman has, however, warned it will take enforcement measures on taxpayers who default on payment plans under the amnesty in a bid to crack down on abuse of the process.
The taxman says the legal measure will help seal loopholes for shrewd businesspersons who may use the window for tax avoidance by entering into a payment plan with no intention of honouring it.
Section 42 of the Tax Procedures Act empowers the KRA to deactivate PINs, issue travel bans, collect cash due from the taxpayer’s banker, and prosecute if the taxman has reasonable grounds that he will default.
