Times Tower, the headquarters of the KRA, in Nairobi. FILE PHOTO | NMG
Summary
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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