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Non-filers of tax returns face Sh20,000 penalty

The KRA is rolling out reforms to seal revenue loopholes. FILE PHOTO | NMG

The Kenya Revenue Authority (KRA) will step up the hunt for workers and businessmen who failed to file tax returns, with culprits to pay Sh20,000 fine.

Treasury says the taxman will pursue workers and business people who failed to declare their income to the State in a drive aimed at plugging the tax shortfalls.

Tax collection for the first five months to November was short of target by Sh29.7 billion, mainly due reduced economic activity on prolonged electioneering period and drought that hit agriculture.

“The Government is going to undertake a combination of policy and administrative reforms to bolster revenue yields going forward,” said the Treasury.

“Some of the reforms include… expansion of tax base by targeting informal sector, betting lotteries and Gaming and pursue non-filers.”
Kenya has been blamed for a small tax bracket that fails to capture the self-employed and those working in the informal sector.

Official data show that 2.6 million Kenyans worked in the formal sector last year compared to 13.3 million in the informal sector.

KRA reported that 2.4 million workers and businesses filed their returns by end of June deadline, meaning thousands of businessmen and employees failed to do so.

READ: KRA nets more land dealers through iTax

To nab the tax cheats, KRA will review data from the platform that links the government payment system to the online tax register, dubbed the iTax, targeting those who make millions of shillings from trading with the state.

“Other measures include data matching and use of third-party data to enhance compliance by integration of iTax with IFMIS,” says Treasury of the planned reforms. IFMIS is the government payment system.

It is also relying on the filings by companies revealing their suppliers and amount paid for their supplies in what last year led to the deactivation of more than 95,000 PIN accounts in a crackdown on tax cheats.

READ: KRA fires warning shot at iTax non-compliant company board directors

Kenya in 2015 raised the penalty for failure to file returns to Sh20,000 from Sh1,000, but the enhanced fines took effect last year.

KRA has also beefed up its intelligence and investigation teams.

Tax collection shortfall has prompted the Treasury to cut projected revenue for the year ending June by Sh61.4 billion to Sh1.643 trillion.



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