In the course of filing tax returns, taxpayers find themselves in situations where they are not able to abide by the strict tax procedures and timelines both for monthly and annual tax returns. When this happens tax payers end up getting penalized either for filing taxes late (Late filing) or for not filing at all (Non filing). Once these penalties are imposed they continue to accumulate interest up to the point when they are paid up. A Taxpayer is said to have paid all the taxes when both the principal tax plus accrued interest and penalties are paid.
There are times when circumstances beyond the taxpayers
control contribute to late filing or non-filing. When this happens a tax payer
can apply to the commissioner for these penalties and interest to be waived or
forgiven.
As such, the Kenya Revenue Authority (KRA) issued a public
notice regarding the processing of tax
waiver applications with a requirement that all applications for waiver of
penalty and interest be properly justified and supporting evidence provided.
What is the Kenya revenue authority (kra) waiver application?
Kenya Revenue Authority (KRA) Waiver application refers to a
letter addressed to the commissioner by a tax payer stating the reasons why one
needs the penalties imposed either for late filing or for non-filing of returns
to be waived. The Tax Procedures Act, 2015, under Section 89(7), provides that
a taxpayer may apply for waiver of penalty or interest where they meet the
conditions specified therein. This conditions are:
- That
all applications for waiver of penalty and interest are properly justified
and supported with proper evidence.
- That
the principal tax has been paid
- That
the taxpayer has been tax compliant on all other taxes
What is the processing of tax waiver applications?
This refers to the process of scrutinizing all the waiver
applications submitted to KRA to confirm whether they are justified and whether
the proper evidence was provided.
All pending waiver applications had been assigned a KRA
I-tax reference number and as such all taxpayers with any pending waiver
applications will be notified via email to provide supporting documentations
and evidence for scrutiny. Once the notification is received a taxpayer will be
allowed 30 days to respond accordingly.
A taxpayer may choose to respond directly or seek the
services of a tax consultant to assist in organizing and submission of the
supporting evidence. Waiver evidence that will be submitted past the
deadline date or one that does not have proper supporting evidence will be
rejected. If rejected, then KRA will demand all accrued penalties and interest
from the taxpayer.
What Should You Do When You Get Notification To Provide
Evidence In Support Waiver Processing?
DO NOT IGNORE IT!
- Confirm
to which tax category the waiver application relates to. E.g. is it VAT,
VAA, Income Tax, etc.
- Take
note of the notification date. You have 30 days to respond and no
responses will be accepted past the deadline date
- Compile
the appropriate evidence.
- Submit
the evidence to KRA.
What supporting evidence should you provide?
The evidence to be provided will depend on the reasons laid
out when applying for the tax waivers. Some of the reasons include; cash flow
constraints, errors in input invoice declarations especially in VAT Auto
Assessments (VAA), etc. What is important to note is to ensure no matter the
reason proper justification and documentary proof is provided in a manner that
is sufficient enough to enable granting of waiver.
How to Write KRA Waiver Letters
The Tax Procedures Act of 2015 allows taxpayers to apply for
a wavier for penalty or interest.
According to the tax collector, businesses and individuals
seeking waivers must meet the requirements in line with the Tax Procedures Act
of 2015.
“All waiver applications that will not have supporting
evidence presented by the specified deadline shall be rejected and the penalty
and interest thereof demanded payment,” said KRA.
How To Apply For KRA Waiver Using iTax
Requirements for KRA Waiver Application
- Your
KRA PIN Number
- Your
iTax Password
- KRA
Waiver Letter
****
Application Form for Waiver contains the following
fields:
Section A
Section B
Applicant Information (Applicant Type, Taxpayer PIN and
Taxpayer Name)
Upload Document (Upload Document for Waiver Application i.e.
KRA Waiver Letter)
Details of Waiver (Tax Obligation and Tax Type)
In conclusion
A successful grant of a waiver application is a welcome move
to any taxpayer. Businesses have been experiencing cash flow challenges
especially post covid 19 and it is imperative that any opportunity to get tax
reliefs in the form of waivers on penalties is taken advantage of. Some of these
penalties and interest have accrued into thousands if not millions of
shillings.