Kenyans risk paying fines of up to Ksh10 million should they boycott paying taxes in line with the civil disobedience called for by Former Prime Minister Raila Odinga on Tuesday, June 27.
As detailed in the Tax Procedures Act of 2015, all Kenyans with an income, whether employed or self-employed, are required to pay taxes.
Raila's call for civil disobedience was informed by the new tax measures contained in the Finance Act assented to by President William Ruto on Monday, June 26.
The most contested taxes included the 3 per cent Housing Fund tax, the 16% fuel VAT and a 5 per cent withholding tax for digital content creators.
"We embark on a campaign of defiance and civil disobedience that will take different forms at different times, including refusal to pay taxes, and whose aim is to force Mr William Ruto to respect the people and repeal the Finance Act 2023.
"I appeal to businesses to disable or avoid Electronic Tax Registers, make nil returns on VAT and instead give discounts to customers. This way, we shall recover the VAT Ruto is taking illegally through fuel," Raila stated at the time.
Instructively, those who follow through and fail to pay the taxes will have committed four offences as detailed below;
Failure to Pay Tax
One is deemed to have committed an offence should they fail to pay tax on the set date.
Fraud in Relation to Tax
An individual who deliberately fails to meet their tax obligation is liable to a fine not exceeding Ksh10 million or compelled to pay double the tax they failed to remit- whichever is higher.
Defaulters also risk a jail term of 10 years.
Aiding or Abetting an Offence
Apart from penalties imposed on those who fail to pay taxes, those who incite others not to meet their tax obligations also face hefty penalties.
"A person commits an offence if that person aids, abets, assists, incites or induces another person to commit an offence under tax law (referred to as the principal offence).
"That person shall be liable for the same sanction as imposed for the principal offence," reads the Act in part.
Employees and Companies
Should companies also fail to remit required taxes, the Act stipulates that the move will be considered an offence and the company's executives held culpable.
"If the person that commits an offence under a tax law is a company, the offence shall be treated as having been committed by an individual who, at the time the offence was committed, was the chief executive officer, managing director, director, company secretary, treasurer or other similar officers of the company.
"A person who knowingly damages or impairs any computerised tax system shall be liable to imprisonment for a term not exceeding three years or a fine not exceeding Ksh800,000," reads the Act in part.
Other Penalties Related to Taxes
Late payment of PAYE tax attracts a penalty of 5 per cent of the tax due and an interest of 1 per cent per month.
Failure to deduct Withholding VAT and Withholding Rental Income Tax also attracts a penalty of 10 per cent of the amount of the tax involved. Late payment attracts a penalty of 5 per cent.
