KRA announced the suspension in a public notice mid this month and added it would reconfigure its online tax filing platform -- iTax system to meet the new standards.
The Kenya Revenue Authority (KRA) on Tuesday said its decision to suspend the processing of nil income tax returns for 2017 is aimed at blocking tax cheats.
The agency announced the suspension in a public notice mid this month and added it would reconfigure its online tax filing platform -- iTax system to meet the new standards.
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.
“The intention and objective of this public notice advisory is to discourage non-genuine Nil Tax return filers,” KRA commissioner of Domestic Taxes Benson Korongo said.
The filing of 2017 tax returns, which started on January 1 and runs up to June 30, enters the third month tomorrow – setting the stage for a possible pile up of filings in the suspended category.
KRA reported that 2.4 million workers and businesses filed their returns by end of June last year, meaning thousands of businessmen and employees failed to do so.
Kenyan law requires anyone with a Personal Identification Number (PIN) to file a return annually -- including a nil return. Kenya in 2015 raised the penalty for failure to file returns to Sh20,000 from Sh1,000, but the enhanced fines took effect last year.
“Non-filers for cases of taxpayers with gainful economic activities are in contravention of the law,” Mr Kerongo said adding that “genuine nil filers are allowed under the law in order to avoid any late or non-filing penalties.”
Nil income tax return shows the taxman that a taxpayer falls below the taxable income bracket and therefore did not pay taxes during the year. There is no separate form or process for filing nil tax and the entire process is similar to filing a normal return.
Experts have faulted this structure. “In any tax system, the compliance burden has to be as simple as possible,” said Nikhil Hira, Deloitte East Africa tax leader, in an earlier interview. Mr Hira had 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,” he said.
The taxman collected Sh1.365 trillion in the year ended June 2017, falling short of the targeted Sh1.44 trillion set by the Treasury.
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