There is nothing sinister with each party pulling towards its side, actually, the tax law is designed to guarantee certainty and fairness to each player.
Kenyan tax system is based on self-assessment which means the onus of declaring tax rests with the taxpayer.
It may be necessary to consult a tax practitioner on how to maintain records, that’s a cheaper option than the risk of non-compliance.
Not a shilling more not a shilling less is the mantra played in the tax game. The government is determined to collect all that is due while taxpayers are keen not to pay anything more than is required of them.
There is nothing sinister with each party pulling towards its side, actually, the tax law is designed to guarantee certainty and fairness to each player. The safest way out for the taxpayer is compliance.
Kenyan tax system is based on self-assessment which means the onus of declaring tax rests with the taxpayer. Given this fact, can a taxpayer under-assess himself to tax? Taxpayers must resist such temptation, the tax declared can only be right if it is supported by relevant records.
It is not enough to file returns and get the response that the return is successful. The commissioner may revisit the matter within five years and demand records.
Self-assessment system creates another possibility that some taxpayers may fail to file returns all together or file nil returns. For such taxpayers, the commissioner invokes his powers of estimating a person’s tax liability and issuing a demand.
When the commissioner makes such an assessment, the taxpayer is left with two options: pay as demanded or prove why he should not pay what is demanded.
In the latter option where the burden of proof has been shifted to the taxpayer, the only way out is to produce valid records.
For self-assessment, the taxpayer must prove the story is true. A tax return is as good as the books of accounts. The law has pronounced itself clearly, a taxpayer must maintain any document under a tax law.
Failure to keep documents as required attracts a penalty. It’s incumbent upon the taxpayer to determine which documents have to be maintained.
It may be necessary to consult a tax practitioner on how to maintain records, that’s a cheaper option than the risk of non-compliance.
Technology deployed by KRA specifically Tax Invoice Management System will solve a great deal of book keeping challenges. Creativity is also welcome for a simplified way of maintaining records for small businesses.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
