The Kenya Revenue Authority (KRA) will freeze bank accounts and block PINS of taxpayers who default on payment plans under the 10-month partial amnesty, among other enforcement measures meant to curb abuse of the process.
The taxman says the legal measure will help seal loopholes for shrewd businesspersons who might use the window for tax avoidance by entering into a payment plan with no intention of honouring it.
The Ruto administration has under the Finance Act 2023 offered a partial tax pardon, which will automatically waive accumulated penalties and interest for taxpayers with no principal tax arrears for the period through December 2022.
Persons with outstanding principal taxes for periods ending December 2022 qualify for the amnesty if they apply between September 2023 and June 2024 and clear the arrears within the same time frame.
The taxman says successful applicants who commit to clear the principal debts through a payment plan should honour the plan without falling back, failure to which enforcement measures shall be applied.
Section 42 of the Tax Procedures Act empowers the KRA to deactivate PINs, issue travel bans, collect cash due from the taxpayer’s banker, and prosecute if the taxman has reasonable grounds that he will default.
Miriam Macharia, lead expert on tax amnesty at KRA’s Domestic Taxes Department, said the enforcement would be applied if the taxpayers do not alert the KRA before falling behind in the payment plan, and cannot be reached through the contacts provided.
“If you feel that something might happen that bars you from honouring the plan, you need to make this plan with your debt manager so that they can give you another date so that you don’t default,” said Ms Macharia.
“So when you sign the amnesty agreement, you sign a contract top honour. The danger of enforcement after you default is that we usually collect all the money we find so that you stop enjoying the luxury of time of having a payment.”
About 17, 000 taxpayers with principal tax arrears of Sh10.1 billion have applied for the tax amnesty since the window opened from September, and have paid Sh3.4 billion.
The remainder of Sh6.7 billion for those who had already applied, as per KRA’s records earlier in the week, must be cleared by June 2024 for the amnesty on penalties and interest to apply.
The taxman targets to collect Sh51 billion from the tax pardon for taxpayers who had failed to pay dues by the end of last year.
President William Ruto, who has ordered KRA to “collect every shilling due”, has in the past said the tax amnesty programme will help noncompliant taxpayers to become compliant by giving them some relief on unpaid taxes.
“This initiative alleviates financial burdens and aligns with our commitment to a fair and inclusive economy. Taxpayers with principal tax debt incurred before January 1, 2023, can therefore take advantage of this opportunity,” Dr Ruto said on September 11.
“The amnesty programme assists taxpayers facing financial challenges related to unpaid taxes, thus fostering economic growth and inclusivity for all Kenyan citizens.”
The KRA last month deployed 1,400 paramilitary revenue service assistants (RSAs), to help enhance tax compliance amongst traders, including the facilitation of online registration of businesses.
The RSAs are also tasked with collecting data on taxpayers by conducting market surveillance to identify non-registered traders and doing continuous patrols to ensure customers are issued with tax receipts following the rollout of the Electronic Tax Invoice Management System (eTIMS).
