Simplified application of Tax Compliance Certificates will enhance efficiency, transparency

By Elizabeth Meyo

Whenever public institutions place a job advertisement, it is never complete without invoking the famous ‘Chapter Six’ requirements that every candidate must fulfill. A tax compliance certificate (TCC) is among the ‘Chapter Six’ requirements that potential candidates are required to produce before they are considered for a job in a public entity.

The Kenya Revenue Authority (KRA) is the body constitutionally mandated to issue or revoke Tax Compliance Certificates (TCC). A tax compliance certificate is a measure of a taxpayer’s level of compliance with tax filing and payment obligations.

Application and issuance of TCCs has undergone major transformations, all geared towards enhancing efficiency and transparency in the process. Before iTax, taxpayers were required to visit KRA offices for manual application of the certificate. As a characteristic of manual processes, issuance of a TCC would take a while as KRA had to manually verify the compliance status of the applicant.

In August 2014, with the introduction of the iTax system, TCC issuance became the first domestic tax process to be automated. Though this was a major improvement from the manual process, taxpayers still had to wait for a few days before being issued with the certificate which meant that TCC processing remained a customer service concern.

To further simplify the TCC process, KRA has recently enhanced the iTax system to automatically validate an applicant’s compliance status prior to application for a TCC. In the enhanced process, compliant taxpayers are able to enjoy automatic issuance of TCC at point of application. Within two weeks of its implementation, more than 18,000 taxpayers have benefited from this service.

In instances where a taxpayer has any compliance gaps, the iTax system displays all pending returns and/or payments which must be addressed prior to issuance of a TCC. Appreciating that TCC is a compliance enforcement tool, taxpayers with outstanding tax liabilities will be required to pay their tax arrears which once received will also enable automatic issuance of TCC. Should a taxpayer not be in a position to clear their tax arrears, they will have to apply for a payment plan on iTax and pay the first installment which will enable approval of the payment plan and subsequent automatic issuance of a TCC upon application.

So, what constitutes tax compliance? Compliance with tax obligations means filing one’s returns on time, declaring the correct income and remitting the relevant taxes within the prescribed timelines on the taxes that one is registered for. This may include filing of a nil return for periods when the taxpayer did not earn any income.

So, when is the ideal time to apply for a TCC? Given the critical role of the certificate in sourcing for business opportunities or in job applications, the most ideal time to apply is now. KRA has made it simple to be in control of your compliance status and it will not hurt to always have your tax compliance certificate at hand. If for nothing else, applying earlier than necessary gives ample time to address compliance gaps, if any.

An unwritten tax rule holds that noncompliance with tax matters can be an expensive affair and the reverse is very true. Therefore, every taxpayer has a responsibility to ensure that their tax record is clean at all times. KRA is working towards continuous improvement of tax processes and we are always at hand to facilitate our taxpayers through the various support channels.

The writer is the Commissioner for Domestic Taxes at KRA

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