Taxpayers stranded as bug hits iTax system

Thousands of taxpayers, who own rental houses, have been struggling to file monthly rental income tax returns after the Kenya Revenue Authority’s (KRA) digital tax payment platform iTax failed.

Property owners said they were unable to file returns from last month when they began encountering the challenge.

Property owners are required to file monthly rental income by 20th of the following month and prolonged dysfunction of the platform sets the stage for a possible pile up of filings ahead of Thursday deadline.

Persons with rental income between Sh144,000 and Sh10 million per annum are required to complete a monthly tax return declaring the gross rent from which tax payable is computed at the rate of 10 percent.

Filing the return via iTax enables a user to generate a payment slip, which is presented to any of the KRA-appointed banks for payment of the due tax.

One affected home owner said he had not been able to pay the tax despite reaching out to KRA for help.

The Business Daily learned that a bug had infected the system, causing it to stall.

"Apparently there was some bug in the system that changed the Excel template," a source at KRA, who cannot be named because he is not authorised to speak for the organisation, said.

KRA had by close of business yesterday not responded to our queries on the technical glitch.

The taxman, however, confirmed the existence of the hitch in a notice on its social media platform after it asked those unable to file returns to reach out to the agency for assistance.

"Having issues filing your monthly returns?" KRA posed. "Kindly share your email address via inbox/direct message so that we can send you the monthly rental income Excel sheet to facilitate your filing of tax returns."

KRA then urged the affected taxpayers, in a subsequent notice on social media, to visit its portal www.kra.go.ke to access a monthly rental income Excel sheet to facilitate filing.

Tax experts said the taxman urgently needed to rectify the system for purposes of enhancing efficiency for taxpayers and promoting tax compliance.

"It is very critical that the glitch is urgently addressed," said Mr Nikhil Hira, a tax expert and director at law firm Bowman's Kenya.

The affected taxpayers asked KRA not to punish them with fines for delays that are not of their making. The taxman has in recent years been on a vigorous compliance drive to get landlords to pay rental income tax.

Penalties for late filing amount to Sh20,000 or five percent of the tax due, whichever is higher, while the penalty amounts to five percent of the tax due and a late payment interest of one percent per month on the unpaid tax until it is paid in full.

In February this year, KRA suspended the processing of nil income tax returns for 2017, citing the need to "reconfigure" the system.

iTax was launched in October 2013, as part of KRA’s modernisation plan aimed at simplifying the filing of tax returns and gathering deeper data to seal tax evasion loopholes.