Individuals filling tax returns face a Sh100, 000 for each false or incomplete information presented to the Kenya Revenue Authority (KRA) as the State intensifies the fight against dodgers.
The penalties for the information breach, which also carry a three-year jail term, will also apply to employers and business partners, says the Finance Bill that is before Parliament and seeks to review a number of taxation laws.
“A person who makes a false statement or omits any information required to be included in an information return under 6B shall be liable to a penalty of one hundred thousand shillings for each such false statement or omission to imprisonment for a term not exceeding three years,” says the Bill.
The penalties if approved by Parliament will take effect from July 1 and come at a time millions of taxpayers are racing to file their tax returns ahead of the June 30 deadline.
More than 4.4 million taxpayers filed their returns in the year to June 2020 and the KRA has had targeted 5.5 million for the period ending June.
The amendments also propose a Sh1 million fine for financial institutions, including banks, insurance and investment firms, that the KRA relies on for records on tax compliance.
“A reporting financial institution that fails to file an information return or a ‘nil’ return when required under section 6B shall be liable to pay a penalty of one million shillings for each such failure,” says the Bill.
The proposals come months after the KRA rolled out a voluntary tax disclosure programme where taxpayers with arrears for the past five years are to get full or partial relief on penalties and interest on the undisclosed taxes. The KRA’S onslaught on tax cheats received a major boost last year after the High Court ruled that the taxman had powers to compel taxpayers to provide details of wealth they failed to disclose in their annual tax returns.
The ruling made in February last year allows the KRA access to their records, computers and mobile phones.
The KRA’s intelligence unit has been using various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority (KCCA).
Faced with missed revenue targets, the taxman has in recent years stepped up the war on tax cheats following a presidential directive in November 2018 to investigate wealthy individuals whose lifestyles did not match their tax filings.
The KRA last year said that its intelligence unit had identified wealthy individuals and businesses holding Sh259 billion in unpaid taxes, setting the stage for property seizures, prosecutions and other enforcement actions.
The latest data shows that the KRA collected Sh176.66 billion in April, exceeding its revised collection target for the month by 3.8 percent and marking the fifth time in a row that it had outperformed monthly goals. The taxman attributed the performance to “enhanced by the sustained implementation of compliance efforts, revenue enhancement initiatives and improved service delivery”.
The April collections — taxes and agency fees and levies such as Road Maintenance Levy and Petroleum Development Fund — were 22.63 percent more than Sh144.06 billion posted in the same month last year at the height of the Covid restrictions.