New Bill seeks to give Treasury CS powers to waive Ksh.5M penalty for tax agents

The Treasury Cabinet Secretary will have the power to waive penalties for tax agents who failed to transfer funds to the Central Bank of Kenya (CBK) if a new Bill passes into law.

A tax agent is an individual who is licensed by the Kenya Revenue Authority (KRA) to collect taxes on behalf of a taxpayer. This also includes an administrator, executor of a will, liquidator or a trustee in bankruptcy.

The agents are liable for either failing to submit proper documents when requested by KRA or failing to transfer funds to the CBK on behalf of the taxpayer, which is interpreted as helping the taxpayer avoid paying taxes.

 In line with the Tax Procedures Act of 2015, this attracts a fine not exceeding Ksh.5 million, or a five-year jail term, or both.

However, the proposed Bill will now grant the tax agents a reprieve if it is passed into law as the Treasury CS will have the powers to waive the penalties.

The Kenya Revenue Authority (Amendment) Bill, 2024, sponsored by National Assembly Majority Leader Kimani Ichung'wah provides four reasons when the CS can give immunity to a tax agent.

This includes a system downtime which prevents the transfer of funds and the matter promptly reported to the KRA Commissioner, or the agent proving that they did not commit the offence knowingly. 

Another reason provided is if the agent was put under receivership or any other unforeseeable circumstances that prevents the person from transferring the funds.

"The Bill also amends section 15A to give the Cabinet Secretary power to waive the penalty payable by an appointed agent who fails to transfer funds collected, if the failure was inadvertent, or the person has been out under receivership or statutory management," the Bill reads in part.

Additionally, the Bill seeks to provide the KRA Commissioner General with powers to appoint Deputy Commissioners and also provide a legal framework for the Kenya School of Revenue Administration to collaborate with other learning institutions to develop a school curriculum.

The curriculum will involve assessing and examining students and thereafter awarding certificates.  

The Bill was received in the National Assembly on August 5, 2024, and will go through the Parliamentary process and if approved, will be signed into law by the President.