This archive report was first published on 31 July 2019.
On July 31, 2019, the Kenya Revenue Authority (KRA) announced plans to revise the Tax Procedures Act 2015, reducing the penalty for late tax returns filing.
Under the proposed amendment, the fine will be based on the amount of tax not paid to the KRA, rather than the total tax due in the preceding year.
Currently, individual taxpayers face a fine of Sh2,000 or five percent of the annual tax payable, whichever is higher, while companies are fined Sh20,000 or five percent of the tax payable in the year the return is meant to capture.
Commissioner for Domestic Taxes Department Elizabeth Meyo explained that the proposed changes aim to incentivize timely tax payments by reducing the burden on employees and businesses who have already paid taxes.
“The iTax system will now impose a penalty only on unpaid taxes and not on the tax payable, which appears in the return,” Ms. Meyo said.
For example, an employee who misses the June 30 deadline for filing returns will pay a Sh2,000 fine under the proposed law, instead of Sh13,593.78, which is five percent of their Sh271,875.60 paid by their employer.
