The Kenya Revenue Authority (KRA) is targeting to collect Sh10 billion in Nakuru County from a 10-month amnesty it has granted to Kenyans who had failed to pay taxes by the end of last year.
The Authority announced that the amnesty would extend to those penalized for failing to settle their tax dues by December 31, 2022, or who had fines and accrued interest.
Nakuru County KRA Station Manager Mr Charles Cheruiyot also disclosed that the taxman was promoting alternative dispute resolution (ADR) mechanisms in preference to litigation processes.
Speaking during a media engagement forum with journalists and top KRA officers held at a Nakuru hotel, Cheruiyot said the ADR approach is aimed at moving away from conventional adversarial practices to a more inclusive and participatory process with a win-win outcome for parties.
The ADR process, he said is more flexible, cost-efficient, confidential and time-saving adding it provides the parties with more control over the procedures for resolving the disputes and the results.
“The process has also enabled the tax administration to foster good relationships with taxpayers and enhance tax compliance going forward,” he added.
According to the Tax Procedures Act, cases outside the court should be resolved within 90 days.
Cheruiyot expressed optimism that with greater public and private goodwill, KRA will not only meet its annual target of raising Sh6.3 billion from Nakuru County but there are grounds to believe it could overshoot its revenue target.
The Station Manager called on taxpayers with accrued interests to take advantage of the Tax Amnesty period and pay principal taxes due. He indicated that taxpayers who pay the principal taxes will have their penalties and interests written off.
In the Finance Act 2023, National Treasury Cabinet Secretary Prof. Njuguna Ndung’u proposed tax administrative measures to ramp up collections and reduce the budget deficit by 4.4 per cent of gross domestic product (GDP) from an estimated 5.8 per cent. It is currently Sh849.2 billion.
The measures include a one-year tax amnesty that aims to nudge compliance, a proposal that builds on the success of the ongoing voluntary tax disclosure programme, which has managed to cumulatively enroll over 19,021 taxpayers with an estimated revenue collection of Sh10.4 billion.
As of March 2023, the taxman had managed to collect Sh9.3 billion through the programme.
Cheruiyot explained that the Finance Act, 2023 has provided for tax amnesty which was a limited-time offer that allows for the waiver of fees, interest, and penalties on tax debt that was outstanding prior to December 2022.
He stated that the taxpayers who clear their principal can then apply for amnesty on the principal, interest, and fines.
He added: “All taxpayers are welcome to apply for amnesty and for those who did not file their returns and accrued penalties for non-filing, they automatically qualify, and should go ahead and file their returns.”
From the programme, which closes on June 30, 2024, KRA expects to collect approximately Sh 50 billion.
On August 31, KRA issued guidelines for amnesty, indicating amnesty on taxpayers who did not have outstanding principal tax due by December 31, 2022. Those with the outstanding principal by end of last year but pay by June 30, 2024, will be required to apply for amnesty.
Kenya has increased its use of tax amnesties as a tool to enhance tax collection, improve overall tax compliance, and widen the tax net. Most recently it introduced the Voluntary Tax Disclosure Programme.
Under this programme, a taxpayer voluntarily declares any historic tax liabilities to the Kenya Revenue Authority (KRA). The taxpayer then obtains the benefit of not having to pay, under certain conditions, the resulting penalties and interests.
KRA South Rift Regional Coordinator Ms Alice Kiptoo said they were committed to instituting comprehensive culture change at the KRA in order to make it more supportive of taxpayers.
To achieve this, Kiptoo stated various reforms were being made at KRA to make it a people-friendly, customer-centric organization that facilitates taxpayer compliance as a core tax administration strategy.
KRA, she said, was determined to maximize tax collection while minimizing the compliance burden on the taxpayer.
“We are focusing on a robust service charter anchored on technology which explicitly commits to transforming customer relationships, simplifying the taxpayer processes and optimizing existing facilities to provide efficient services. This shift is designed to demonstrate a strong commitment to the principle of impartial taxation,” stated the official.
The Regional Coordinator affirmed that KRA has set out a strong and transparent integrity assurance mechanism, embedded in an equally vigorous corruption prevention framework in order to create stakeholder confidence in the transparency and accountability of its processes.
KRA Nakuru Station Debt and Enforcement Officer Mr Peter Chege called on Kenyans to be tax-compliant and pay their taxes to aid in revenue collection which will be pivotal in the nation’s development.
Terming it as the only way to be an independent nation, Chege said the nation should use its own resources to develop and not depend on other nations.
“We are encouraging Kenyans to pay taxes because development and service delivery by the public sector cannot be done without money and the government gets money from tax collected,” he pleaded.
Kenya is not alone in using tax amnesty as a tool for improving tax collection and compliance.
Governments have, particularly in times of recession or when public expenditure is growing quickly, encouraged taxpayers to remit past undeclared taxes by offering amnesties.
KRA recorded a revenue collection of Sh2.166 trillion for the period July 2022 – June 2023 compared to Sh2.031 trillion in the last financial year. KRA is expected to collect Sh2.7 trillion with the new raft of changes.
By Anne Mwale
