The government, through the National Treasury, on Wednesday submitted proposals to introduce a Ksh20,000 penalty for Export Processing Zone (EPZ) enterprises that fail to file required returns.
This is in a bid to promote compliance as the Government widens its tax base to meet tax targets proposed by the Ministry.
This initiative is part of broader efforts to ensure that EPZ enterprises adhere to legal and operational standards set by the government.
In a notice by the Treasury, the Tax Procedures (Amendment) Bill 2024 seeks to amend the eleventh schedule to the Income Tax Act which is currently provided under section 83 of the Tax Procedures Act.
If the proposals see the light of day, business owners of enterprises domiciled in EPZ areas will have to part with Ksh20,000 for failing to file required returns on time.
EPZs are designated areas where goods can be manufactured, processed, or assembled chiefly for export. These zones provide benefits to investors like tax exemptions and streamlined customs procedures.
Currently, there are over 40 gazetted zones across the country in various stages of development by both private and public zone operators.
EPZ enterprises are required to file both monthly and annual returns. Monthly returns list the production and exports of a business whereas annual returns detail financial performance throughout the year.
The deadline for monthly returns is set on the 15th day of the following month. On the other hand, annual returns are expected to be filed at the end of the financial year, often due within six months after the close of the fiscal year.
If an EPZ enterprise fails to file returns on time, it may incur penalties with a minimum fine of Ksh10,000 depending on the nature and duration of the delay. Non-compliance may attract further scrutiny which may result in revocation of EPZ status or other legal actions against the enterprise.
The bill also proposes, a 10 per cent penalty for people who fail to withhold and remit tax.
The National Assembly on Thursday invited members of the public to offer submissions on the proposals put forward by the Treasury.
