Taxpayers will now get full or partial relief of penalties and interest on undisclosed taxes for the last five years.
This will be effected through the newly introduced Voluntary Tax Disclosure Programme which is aimed at providing relief to taxpayers during the challenging economic times brought about by Covid-19 pandemic.
The programme is also aimed at enhancing tax compliance through disclosure of unpaid taxes.
The Voluntary Tax Disclosure Programme (VTDP) introduced vide the Finance Act, 2020 commenced on 1st January 2021 and shall run for three years to 31st December 2023.
The programme seeks to grant relief on penalties and interest on any tax liability disclosed in respect to the period of 5 years running from 1st July 2015 to 30th June 2020.
Taxpayers who take advantage of the programme will receive full or partial waiver of the penalties and interest, depending on the time of payment of disclosed taxes.
Persons who make full payment of disclosed taxes in 2021 will get 100% relief in penalties and interest while those who pay in 2022 and 2023 shall get relief at a rate of 50% and 25% respectively.
Detailed guidelines on the VTDP can be accessed on our website (www.kra.go.ke).
VTDP applies to all tax liabilities accrued/derived in the specified period including individual Income Tax, Corporate Tax, PAYE, Withholding Income Tax, Capital Gains Tax, Value Added Tax, Withholding VAT, Excise Duty, Monthly Rental Income Tax and Turnover Tax.
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 settlement of taxes under the programme will be executed through an agreement with the Commissioner and taxpayers are encouraged to ensure compliance with payment agreements contained therein.
Taxpayers are allowed one amendment of the original declaration of return at any time before the lapse of agreement.
A taxpayer will not be eligible to apply for relief under the programme if he/she is;
a) Under audit, compliance verification or investigation
b) Has been served with a notice of intention to investigate or carry out an audit/compliance check for the undisclosed tax
c) Is a party to an ongoing litigation in respect to the tax liability or any matter relating to the tax liability.
Relief under the programme shall only apply in respect to a disclosure resulting in payment of taxes.
Taxpayers will be issued with a VTDP certificate, which will serve as evidence that the person took advantage of the programme in relation to the taxes specified in that certificate.