KRA waives all penalties to taxpayers disclosing hidden arrears in 2021

The Kenya Revenue Authority (KRA) will waive all penalties and interest to tax payers disclosing arrears in 2021 under its new voluntary tax disclosure program (VTDP).

The full-circle relief to tax payers is set to incentivise tax payers to reveal undisclosed taxes as the taxman seeks to reap revenue gains from the voluntary exercise.

The VTDP came into force on January 1 and followed the allowance of the provision under ammendments made through the 2020 Finance Act.

The program is expected to run to December of 2023 with tax payers receiving varied penalty waivers from arrears disclosed and paid up.

“Persons who make full payment of disclose charges in 2021 will get 100 per cent relief in penalties and interest while those who pay in 2022 and 2023 shall get relief at a rate of 50 and 25 per cent respectively.

The relief program applies to all tax liabilities accrued in a specified period including individual income tax, corporate tax, pay as you earn (PAYE) and withholding income tax.

Other tax liabilities include the capital gains tax (CGT), value added tax (VAT), withholding VAT, excise duty, monthly rental income tax and turnover tax (ToT).

“In addition to the waiver of penalties and interest, a person granted relief under the programme shall not be prosecuted for the disclosed tax liabilities. Further those granted relief in accordance with the provision of the VTDP shall not appeal or seek any other remedy with respect to the taxes, penalties and interest remitted by KRA,” the tax man added.

Tax payers are expected to enter into an agreement with the Commissioner of Domestic Taxes on the settlement of disclosed tax liabilities.

Nevertheless, tax payers under investigations over tax non-payment including parties under litigation shall not qualify for the relief program.

The relief program shall further apply to tax liabilities disclosed in respect to five years running from July 1, 2015 to June 30, 2020.

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