KRA Unveils New Relief Program for Tax Defaulters

File image of Kenyan banknotes
File image of Kenyan banknotes

The Kenya Revenue Authority (KRA) has unveiled a new relief program to encourage tax defaulters to declare and settle unpaid dues.

In a notice on December 16, the agency disclosed that the Voluntary Tax Disclosure Programme (VTDP) which was introduced by the Finance Act 2020 would commence on January 1, 2021.

The disclosure program allows a person to disclose to the Commissioner tax liabilities that were previously undeclared and enjoy full or partial relief of penalties and interest on the tax disclosed under the program.

"It shall run for three years up to December 31, 2023. It shall apply to tax liabilities accrued in the period," the taxman stated.

KRA Boss James Githii Mburu gives an address during a past event
KRA Boss James Githii Mburu speaks at a conference in 2019

With the relief, one can disclose their tax liabilities without facing any legal consequences such as prosecution.

According to KRA, taxpayers who will apply within the first year will enjoy 100% waiver of penalties and interest.

Applications made in the second and third years of the program will result in a 50% and 25% waiver of penalties and interest respectively.

Upon making an application, the Commissioner will grant a relief entering an agreement with the applicant, setting out the terms of payment of the tax liability. Payment of the tax liabilities will be made within one year from the date of the agreement.  

"However, where the applicant fails to honour the terms of the agreement, the applicant, in addition to the outstanding tax liability, will be liable to pay the full amount of penalties and interest that had been waived under the agreement," the agency pointed out.

The amnesty will not apply to a person under a tax audit, investigation or is a party to ongoing litigation in respect of the tax liability or any matter relating to the tax liability.

In addition, the program shall not apply in case a person has been notified of a pending audit or investigation by the Commissioner.  

File image of Kenyan banknotes held in a hand on January 25, 2020.
File image of Kenyan banknotes held in a hand on January 25, 2020.
Simon Kiragu

In August 2020, KRA reported that in spite of the difficult operating economic environment brought about by the Covid-19 pandemic, the revenue collection in FY 2019/20 (July 2019 - June 2020) reached a new record with Ksh1.6 Trillion collected, compared to Ksh1.5 Trillion collected in 2018/19.