All persons with the Kenya Revenue Authority (KRA) personal identification numbers (Pins) are required to file returns annually. Of the 6.1 million registered taxpayers in 2021, 5.5 million filed returns.
That looks impressive, however, filing of returns does not necessarily translate to payment of taxes. Some registered taxpayers file nil returns.
The tax filing system i-tax allows returns that are not accompanied with payments popularly known as nil returns.
There are many cases where a person is required to have a Pin, including opening a bank account. Registered persons might also run out of income.
Filing nil return is the quick way of silencing the nudge to file tax returns. No records are required.
It’s however important to consider what filing nil returns means. For a good reason, the i-tax system asks nil filers to confirm that they have no income. The response “return filed successfully” is so satisfying but it does not mean a tax matter has ended, it might be the beginning.
Filing a nil return means that a taxpayer has not engaged in any gainful activity for a full year. It may be true but that’s something the taxman might want to take with a pinch of salt. Being active economically means that one is operating a bank account, has suppliers, landlords, or is paying bills and many other activities.
These transactions leave a trail of information. It is no brainer that with Artificial Intelligence all this information can be reconstructed.
Filing a nil return amounts to offering one's account for profiling. Over time the taxman has been watching the increasing trend of nil filers with a lot of concern. In 2017, the nil filing feature was temporarily suspended from i-tax purposely to discourage such filers.
In 2018, the system was upgraded to require taxpayers to declare that they have no source of income. In 2021, the taxman indicated that the period for filing nil returns shall be limited to three years.
Nil return is the easiest to file but also the most glaring compliance case to pick.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
