KRA fires warning shot at iTax non-compliant company board directors

Board directors have been put on the spot by the Kenya Revenue Authority if their companies fail to migrate to the iTax or file returns on time. FILE PHOTO | NMG 

In Summary

• KRA says board members will now bear the brunt in the event their companies have dormant PIN numbers
• It further says it will reject a company’s entire workers’ income tax filings if one of the employees has a dormant tax account.
• Directors caught violating the requirements of these tax guidelines face a Sh1 million fine and a jail term of three years

By HERBLING DAVID
More by this Author

Directors of companies, which fail to file returns and pay taxes will have their personal identification numbers (PINs) suspended until the firms they lead comply with the law, in a in a fresh move meant to plug revenue leakages.

The Kenya Revenue Authority (KRA) says board members will now bear the brunt in the event their companies have dormant PIN numbers that are not linked to the taxman’s online platform, iTax.

This means directors – who are mostly businesspersons and professionals – will be blocked from accessing critical public services when firms whose boards they sit on are in the crosshairs of the taxman.

“Corporate entities in active business but with PINs not migrated to iTax and are nil or non-filers, will have their PINs deactivated together with those for the directors,” KRA said in an interview with the Smart Company.

Illegal

The taxman also fired a warning shot to employers saying it is now illegal to pay any workers whose PINs are inactive or not migrated to the iTax database.

KRA further said it will reject a company’s entire workers’ income tax filings if one of the employees has a dormant tax account.

“Any employer who pays a non-registered employee is committing an illegality as they will not be compliant with PAYE requirements,” Mr John Njiraini, KRA commissioner general said in an interview.

“iTax cannot accept an employer’s pay-as-you-earn (PAYE) return where the payroll contains employees without PINs or with invalid PINs.”

KRA defines a dormant or inactive PIN as one “which is not active in terms of filing and paying taxes.”

Directors caught violating the requirements of these tax guidelines face a Sh1 million fine and a jail term of three years as provided for in the Tax Procedures Act (2015).

Target

The taxman collected Sh1.365 trillion in the year ended June 2017, falling short of the targeted Sh1.44 trillion set by Treasury.

Mr Njiraini - who hits the retirement age of 60 in December this year - has a herculean task of raising Sh1.75 trillion in the current year to June 2018, a projected growth of 28 per cent.

The push to shore up tax collections saw KRA in August give taxpayers who are yet to migrate their PINs to iTax platform one month to do so or be taken out of the system.

iTax-compliant taxpayers who have not filed returns in the past three months, or are submitting nil returns despite evidence of having steady incomes have also been put on notice.