KRA releases new rules for ‘Nil’ returns

Times Tower, the KRA headquarters in Nairobi. file photo | nmg 

By BRIAN NGUGI

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Summary

• A new form — effected through a reconfiguration of the KRA's online tax filing platform, iTax — requires filers of nil income tax returns to explicitly declare that they do not have any other source of income.
• Information on the document is expected to help the KRA better profile taxpayers in order to fish out evaders.
• Kenyan law requires anyone with a personal identification number (PIN) to file a return annually — including a nil return.

The taxman has released a new digital form that makes it easier to track down people trying to evade taxes by filing ‘Nil’ income tax returns.

The new form — effected through a reconfiguration of the Kenya Revenue Authority’s (KRA) online tax filing platform, iTax — requires filers of nil income tax returns to explicitly declare that they do not have any other source of income.

Information on the document is expected to help the KRA better profile taxpayers in order to fish out evaders.

Kenyan law requires anyone with a personal identification number (PIN) to file a return annually — including a nil return.

‘Nil’ income tax returns indicate that a taxpayer falls below the taxable income bracket and therefore did not qualify to pay taxes during the reported year.

Genuine Nil filers are allowed under the law to avoid any late or non-filing penalties.

The KRA is now expected verify information provided by the ‘Nil’ through their PIN transactions.

“Non-filers for cases of taxpayers with gainful economic activities are in contravention of the law,” KRA Commissioner for Domestic Taxes Benson Korongo said in a notice.

The KRA in mid-February suspended the processing of ‘Nil’ income tax returns for 2017 citing the commencement of works on the iTax platform.

The taxman last Thursday announced that work on the digital form had been completed and that it was ready for use by genuine filers of ‘Nil’ income tax returns.

“The taxpayers filing genuine Nil income tax returns are hereby notified that they can now successfully do so through the iTax system,” the commissioner for domestic taxes said in the notice.

“Taxpayers are further advised to observe timelines and accurate declarations in their returns besides making full payments of any taxes due.”

READ: Why taxman blocked filing of nil tax returns

The filing of 2017 tax returns started on January 1 and is expected to close on June 30.

The KRA reported that 2.4 million workers and businesses filed returns by end of June last year, meaning thousands of businessmen and people in formal employment did not do so.

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.

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

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

The KRA does not have a separate form or process for filing ‘Nil’ tax and the entire process is similar to filing a normal return.

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