Kenya Seeks to Extend Tax Amnesty Period to Boost Revenue Collection

The State is seeking to extend the Kenya Revenue Authority’s (KRA) Tax Amnesty Programme through the Tax Procedures (Amendment) Bill, 2024, aiming to bring more Kenyans into the tax bracket.

This Bill proposes extending the tax amnesty period from June 30, 2024, to June 30, 2025, allowing additional taxpayers to benefit while enabling the government to collect unpaid principal taxes during the extra year.

The new proposal also introduces a provision for tax recovery relief, which allows the Cabinet Secretary for Treasury to grant relief when tax recovery becomes impossible, unduly difficult, expensive, or inequitable. In this proposal, the Commissioner will refer such cases to the Cabinet Secretary, who can approve either partial or full relief.

The Cabinet Secretary must publish the names of taxpayers granted relief and the reasons for these decisions every four months in the Gazette and present these notices to the National Assembly for approval or annulment.

According to a public notice, “The Bill presents an opportunity for the government to amend the proposed provisions to extend the amnesty to cover taxes that have accrued after December 2022.”

This extension would come in response to pressure from small traders and lobby groups advocating for the continuation of the successful program.

The Finance Act of 2023 initially introduced the tax amnesty program, allowing taxpayers to apply for amnesty on penalties and interest related to tax debts incurred up to December 31, 2022. The program ran from September 1, 2023, to June 30, 2024, providing essential relief to taxpayers with outstanding obligations.

During this period, KRA collected Kes.43.9 billion from 1,064,667 taxpayers while waiving penalties and interest totaling Kes.507.7 billion, benefiting 3,115,393 individuals. Under the amnesty program, taxpayers only need to pay the principal amount of their outstanding tax debts. However, those liable for tax avoidance penalties do not qualify for the program, which allows only the waiver of interest and penalties.

KRA acts as the sole authority to approve the amnesty, requiring no specific reason for its granting; the program applies only to taxes accrued up to December 2022.

In contrast, the proposed tax relief from the Cabinet Secretary would consider all taxes, including principal amounts, for relief. This relief requires approval from both the Cabinet Secretary and the National Assembly, with the Commissioner obligated to provide reasons for proposing the relief.

Additionally, the relief is not limited to a specific accrual period. The Bill also proposes changing the computation of time for lodging objections to exclude Saturdays, Sundays, and public holidays, termed “excluded days.”

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