KRA has suspended the processing of nil income tax returns for 2017 on its automated tax payment service iTax.
Under the law, anyone with a Personal Identification Number (PIN) must file a return annually -- including a nil return.
But there is no separate form or process for filing nil tax and the entire process is similar to filing a normal return.
The Kenya Revenue Authority (KRA) has suspended the processing of nil income tax returns for 2017 on its automated tax payment service iTax, citing the need to “reconfigure” the system.
Filing of 2017 tax returns, which started on January 1 this year and runs up to June 30, enters the third month in a week’s time – setting the stage for a possible pile up of fillings that fall in that category.
“The Kenya Revenue Authority (KRA) would like to advise taxpayers who file NIL returns to be patient as our technical team works on reconfiguring the iTax system to facilitate you better,” said KRA in a notice in local dailies.
KRA had by Wednesday not responded to questions on the suspension and the timing of the iTax system reconfiguration.
Tax experts said KRA urgently needed to upgrade its online register to enhance efficiency for taxpayers and promote tax compliance.
KRA commissioner general John Njiraini - who hit the retirement age of 60 in December last year -- and whose term comes to an end on March 3, has a herculean task of raising nearly Sh134.94 billion every month between January and June this year to hit the Sh1.44 trillion full-year target for tax income.
The taxman collected Sh1.365 trillion in the year ended June 2017, falling short of the targeted Sh1.44 trillion set by the Treasury.
Under the law, anyone with a Personal Identification Number (PIN) must file a return annually -- including a nil return.
But there is no separate form or process for filing nil tax and the entire process is similar to filing a normal return.
“In any tax system, the compliance burden has to be as simple as possible,” said Nikhil Hira, the Deloitte East Africa tax leader.
Mr Hira cited what he termed a lengthy process of filing nil tax on the iTax platform as a bottleneck.
“When you file a return on the system you do have to go through all the boxes even if you have no income from a particular source… The need to complete a number of pages even if you don’t have income is one such big burden,” said Mr Hira.
Nil income tax return shows the taxman that a taxpayer falls below the taxable income and therefore did not pay taxes during the year.
Mbiki Kamanjiri, tax manager at Grant Thornton consulting, said the iTax system was still battling hiccups since its launch. “The iTax has come a long way since inception. However, it is still plagued by glitches and downtime due to technical issues,” said Mr Kamanjiri.
Francis Kamau, partner and tax leader East Africa at EY, called for reforms to the iTax, saying it fails to capture certain business forms including partnerships and joint ventures hence locking out some taxpayers.
iTax was launched in October 2013, as part of KRA’s modernisation reforms aimed at simplifying the filing of tax returns and gathering deeper data to seal tax-evasion loopholes.
KRA reported that 2.4 million workers and businesses filed their returns by end of June last year deadline, meaning thousands of businessmen and employees failed to do so.
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