This archive report was first published on 7 May 2020.
As of January 1, 2021, the National Treasury will introduce a voluntary tax disclosure program, allowing individuals and firms to settle their tax arrears without facing penalties.
Under this program, those who disclose their tax obligations and settle their bills within one year will receive a 100% waiver on interest and penalties. This incentive is part of the Finance Bill 2020, sponsored by Hon. Joseph Limo, the chairman of the parliamentary Finance and National Planning Committee.
Those who clear their bills within the second year will receive a 50% waiver, while those who settle their arrears in the third year will receive a 25% relief. The Treasury has proposed changes to the Tax Procedure Act to accommodate this new program.
Unlike the Kenya Revenue Authority's (KRA) past approach, which focused on aggressively pursuing tax evaders, this new program aims to encourage voluntary compliance. Between July and September 2019, KRA recovered KSh 54.3 billion from 118 individuals, and during the 2018/2019 financial year, KRA recovered KSh 8.53 billion from 222 tax evasion cases.
However, individuals and firms under audit, investigation, or party to an ongoing litigation will not benefit from this amnesty. The KRA has been actively pursuing tax evaders, including betting firms, electronics dealers, excisable goods manufacturers, steel and hardware dealers, county suppliers, high-end motor vehicle importers, and real estate businesses.
