Worldwide, a good tax compliance score is a fundamental aspect for the smooth running of any business or any profession. Contrary to popular belief, tax compliance is not entirely defined by payment of taxes only. Filing of tax returns is equally an important aspect that grants a taxpayer a clean bill of health with respect to tax compliance.
A tax return is a declaration made to the Commissioner of the income earned or generated over a given period. Where no income was earned or generated during the period, a taxpayer is required to submit a Nil return. Filing of tax returns is a key tenet of tax compliance which the Kenya Revenue Authority (KRA) considers in the issuance of a tax compliance certificate (TCC).
With only a few days left to the deadline of filing the 2020 annual tax returns, we are already in the homestretch phase of this important exercise. Going by the number of tax returns that we have received so far, it is notable that most taxpayers have heeded the call to file their returns. By mid-June, KRA had received more than 3.6 million tax returns which translates to a 25 per cent increase compared to the returns that had been submitted over a similar period last year. However, there is equally a substantial number of taxpayers who are yet to comply.
The return filing deadline of 30th June 2021 applies to all individual taxpayers and also to business entities whose accounting period runs from January to December. Individuals with employment income require P9 forms issued by their employers, to file their tax returns. Employers are therefore urged to issue their employees with P9 forms in good time to facilitate their filing of returns. Those with business income should have their books of accounts and financial statements ready for reference when filing their returns.
KRA has continuously made deliberate efforts to simplify the process of filing tax returns for enhanced user experience. Submission of tax returns is done online on KRA’s iTax platform (http://itax.kra.go.ke). Taxpayers with employment income only can now use the simplified web based pre-populated income tax return, labelled ‘ITR for employment income only’ on iTax to file their returns. To further simplify tax processes, KRA has also introduced a mobile phone application known as M-service which enables taxpayers to access various services offered by the Authority such as taxpayer registration, filing of returns and payment of taxes. Taxpayers who did not have any income last year can use the M-service application to submit a Nil return.
In addition to filing of annual tax returns, iTax is the gateway to conducting other tax business such as PIN application, tax payment, taxpayer ledger maintenance, application for TCCs, application for waivers and payment plans, among others. iTax is among various technological advancements that KRA has put in place to enhance efficiency and simplify the tax administration process. Simplification of tax processes translates to higher compliance among taxpayers, hence KRA’s continued commitment to simplification of its processes.
Failure to file a tax return within the stipulated timelines amounts to non-compliance, which comes with a penalty as provided in the Tax Procedures Act 2015. Individual taxpayers who submit their returns after the 30th June deadline will be liable to a penalty of Kshs. 2,000 or five per cent of the tax due, whichever is higher. Non individual entities on the other hand are liable to a penalty of Kshs. 20,000 or five per cent of the tax due, whichever is higher, for late filing of their income tax returns. With KRA’s support and the ample time provided for under the tax laws for this exercise, these penalties are avoidable.
In order to serve as many taxpayers as possible, KRA has made some adjustments to the operational hours of the various service touch points. The contact centre is now accessible from 6.00am to 10.00pm on weekdays, and 9.00am to 4.00pm over the weekends. The KRA contact centre contacts are 0711 099 999 for calls and email@example.com for emails.
We further have additional support at KRA iTax support centres countrywide which are now operational between 7.00am and 6.00pm on weekdays and from 8.00am to 1.00pm on Saturdays. Physical engagements are done in strict adherence to all Covid-19 prevention protocols.
We therefore call on all taxpayers who are yet to fulfil this civic duty to do so before the grace period given under the tax laws elapses, to avoid non-compliance penalties.
The writer is the Commissioner for Domestic Taxes Department at KRA.