The Kenya Revenue Authority has written off Sh507.7 billion in accumulated penalties and interest for companies and individuals under the tax pardon programme, which ended in June 2024.
The waiver applied to nearly 3.12 million taxpayers who paid up principal arrears that had accrued until December 2022, the KRA says, adding that the beneficiaries have already been roped into the tax net.
Under the 10-month partial tax amnesty, firms and individuals who had cleared the principal taxes automatically had arrears in outstanding fines and interest written off without applying under the programme, which started September 2023.
Those who had not paid the principal taxes by the start of the programme were required to apply and, either pay or enter into a repayment plan to clear what they owed by the end of last June. “Tax amnesty programmes have contributed significantly to improving tax compliance.
Similar to offering a second chance, these programmes encourage non-compliant taxpayers to go back into the tax system and correct any errors,” KRA Commissioner-general Humphrey Wattanga said via email.
The Ruto administration under the Finance Act 2023 offered the pardon on accrued penalties and interest, which applied automatically for taxpayers who have cleared all the arrears owed for the period ended December 2022, while those with arrears were required to apply.
More than 1.06 million (1,064,667) businesses and individuals with principal taxes in arrears amounting to Sh54.50 billion applied for forgiveness during the initial window between September 2023 and June 2024, KRA documents show.
However, the revenue agency received Sh43.93 billion by the end of June, indicating that a fifth (19.41 percent), or Sh10.58 billion, of the amount due was not remitted.
Lawmakers earlier this month extended the tax pardon programme, opening a new window for taxpayers with outstanding principal taxes for the period up to December 2023 to settle them by June next year to qualify for the partial pardon.
They resisted a push from business lobbies and tax consultancy firms to allow taxpayers up to a year (or December 2025) to pay up the arrears, citing “potential revenue losses”.
Business groups and other stakeholders had argued that extending the compliance period would encourage more taxpayers to clear their tax dues and broaden the tax base.
Applying for amnesty and failing to settle the principal debts by June 2025 could prompt the KRA to institute enforcement measures in a bid to recover the amount owed.
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 in the Domestic Taxers Department, previously said the enforcement would be applied if the taxpayers do not honour a repayment plan within the 10-month window 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,” Ms Macharia had warned.
“So when you sign the amnesty agreement, you sign a contract to 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.”
