Kenya Revenue Authority issues guidelines on tax amnesty application process

• Guidelines are now available addressing how the Kenya Revenue Authority will implement a tax amnesty program that recently became law.

• The tax amnesty program is available until 30 June 2024.

• Taxpayers should determine whether they qualify for the program.

The Kenyan Revenue Authority (KRA) has issued guidelines on the implementation of a tax amnesty program introduced under the Kenyan Finance Act 2023. The Act introduced Section 37E into the Tax Procedures Act, which requires the KRA to refrain from recovering historical outstanding penalties and interest.

The amnesty applies where the principal tax has been settled under the following circumstances:

1. Full amnesty on penalties and interest accrued for periods up to 31 December 2022 if principal tax was fully paid by 31 December 2022
2. Amnesty upon application if the taxpayer settles the outstanding principal tax by 30 June 2024, for historical periods up to 31 December 2022

Implementation

The KRA's implementation guidelines for implementing the tax amnesty program are detailed below.

a. Eligibility

Category 1 taxpayers

Category 1 taxpayers have settled the principal tax on their historical tax obligations of up to 31 December 2022. These taxpayers are entitled to an automatic amnesty of any accrued penalties and interest.

Category 2 taxpayers

These are taxpayers who have outstanding principal tax for historical periods up to 31 December 2022. They are required to apply for the amnesty coupled by a payment plan for the outstanding principal tax. The outstanding principal tax must be settled by 30 June 2024.

However, penalties and interest are excluded from the amnesty process if they:

1. Arise from tax avoidance under section 85 of the Tax Procedures Act
2. Are related to tax liabilities of tax periods after 31 December 2022

b. Tax amnesty process

The amnesty application process may be accessed either by submitting a hardcopy (paper) application or and by utilizing the online tax return filing system, i-Tax. The taxpayer is required to assess existing liabilities, namely, principal tax, penalties and interest for historical periods up to 31 December 2022.

Where a taxpayer has an outstanding principal tax, they should ensure full payment of the principal tax by 30 June 2024.

c. What happens when one is already enrolled for a Voluntary Tax Disclosure Programme (VTDP)

If a taxpayer had already kickstarted a VTDP process that has not been fully finalized, the taxpayer is required to liaise with the KRA if they had already paid existing principal tax.

d. Timeframe

The amnesty process is active up to 30 June 2024.

Taxpayers are encouraged to take up the amnesty to regularize their historical tax position.

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Kenya), Nairobi

• Francis Kamau

• Christopher Kirathe

• Hadijah Nannyomo

• Grace Mulinge

• Robert Maina

• Stanley Maina

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.