KRA Tax Amnesty: Everything You Need to Know!

In 2023, the Finance Act introduced a Tax Amnesty Program i.e. KRA Tax Amnesty 2023, which involved the addition of Section 37E to the Tax Procedures Act of 2015. This KRA Tax Amnesty is designed to address interest and penalties on tax debt owed by a taxpayer to the Kenya Revenue Authority (KRA). The KRA Tax Amnesty applies to two categories of taxpayers (both individuals and non-individuals) in Kenya:

1. Those taxpayers who have incurred penalties and interest but do not have outstanding principal taxes for periods up to December 31, 2022. This category of taxpayers do need need to apply for KRA Tax Amnesty since the penalties and interest will be removed automatically by the system as they don’t have any principal tax due.

2. Those who have accrued principal tax obligations up to December 31, 2022, but who fully settle their outstanding principal tax debt by June 30, 2024. This category of taxpayers have to apply for the KRA Tax Amnesty and make an installment payment plan which once they have cleared the principal tax, all the penalties and interest will be removed.

The Finance Act of 2023 also eliminated previous tax waiver and abandonment provisions, encouraging taxpayers to take advantage of this new tax amnesty opportunity. This means that going forward, there will no longer be waiver applications and all taxpayers are advised to utilize the Tax Amnesty 2023 program.

Kindly note that all taxpayers who do not have principal tax due for periods up to 31st December 2022 but have penalties and interest due shall qualify for the tax amnesty. The amnesty under this category shall be automatic and taxpayers will not be required to apply on KRA Portal or iTax Portal.

Purpose Of KRA Tax Amnesty

The primary objective of these guidelines is to offer taxpayers comprehensive and easily understandable instructions pertaining to the proper execution of the tax amnesty program by Kenya Revenue Authority (KRA).

By presenting a concise and transparent framework, these guidelines aim to facilitate compliance and participation, ensuring that taxpayers can fully avail themselves of the benefits and opportunities provided by the program while adhering to all relevant tax regulations and requirements.

This transparent approach fosters trust and cooperation between taxpayers and tax authorities, ultimately contributing to a more efficient and equitable tax system. Taxpayers who have principal taxes, penalties and interest are advised to take advantage of the Tax Amnesty by KRA. The same applies to also those taxpayers who only have either penalties and interest, difference being they don’t need to apply as the penalties will be removed.

The Finance Act 2023 introduced a Tax Amnesty on interest and penalties on tax debt for periods upto 𝟑𝟏𝐬𝐭 𝐃𝐞𝐜𝐞𝐦𝐛𝐞𝐫 𝟐𝟎𝟐𝟐. The tax amnesty by Kenya Revenue Authority (KRA) will run from 1st September 2023 to 30th June 2024. This means that going forward, there will no longer be a KRA Waiver application on iTax Portal. So, everyone needs to take advantage of this opportune moment in the tax system in Kenya.

Eligibility Of The KRA Tax Amnesty

1. All taxpayers who have accrued penalties and interest but have no outstanding principal tax due for periods up to December 31, 2022, automatically qualify for the tax amnesty. No application is required in this category. This means if you fall under this category of taxpayers in Kenya, there is no need for you to submit the Tax Amnesty application.

2. As for the taxpayers with outstanding principal tax debts for periods up to December 31, 2022, who wish to qualify for the amnesty must:

Apply for the KRA Tax Amnesty using the KRA Portal (iTax Portal).
Submit a payment plan proposal for the outstanding principal taxes along with their Tax Amnesty application.

3. Taxpayers who have self-assessments or amended assessments related to any period up to December 31, 2022, but generated after this date, are eligible for the amnesty as long as they pay the outstanding principal taxes from these assessments before June 30, 2024.

4. Any taxpayer with pending tax liabilities under dispute may also qualify for the Tax Amnesty if they meet the specified conditions set by Kenya Revenue Authority (KRA).

Exclusion From KRA Tax Amnesty

Interest and penalties related to tax avoidance (Section 85 of the Tax Procedures Act, 2015) are not eligible for the Tax Amnesty.
Penalties and interest associated with tax debts accrued after December 31, 2022, do not qualify for the Tax Amnesty.

Effective Date Of KRA Tax Amnesty

The KRA Tax Amnesty program begins on September 1, 2023 and remains in effect until June 30, 2024. During this window time frame, individuals and entities have a golden opportunity to alleviate the financial tax burden of accrued interest and penalties related to their principal tax.

It is imperative for all eligible taxpayers to seize this time-sensitive chance, fully understanding the eligibility criteria, application process and conditions.

Basis of Processing the Amnesty

The processing of the tax amnesty is based on the tax period and tax obligation.

Tax Liabilities Covered

The tax amnesty applies to all tax categories outlined in the Tax Procedures Act of 2015.

General Conditions for Remission of Penalties and Interest

A person or taxpayer qualifies for remission of interest and penalties under the following conditions:

Only interest and penalties related to principal tax obligations for periods up to December 31, 2022, will be granted amnesty upon full payment of the principal tax by June 30, 2024. Failure to pay the principal tax by this date disqualifies any associated penalties and interest from amnesty.
Taxpayers with tax liabilities for periods prior to December 31, 2022, involving return amendments, reconciliations, or unresolved system issues must first conclude these processes with their respective Tax Service Offices (TSOs) before the amnesty can be granted.
Taxpayers with tax liabilities for periods up to December 31, 2022, under dispute may engage with the Commissioner to settle the disputes and establish a payment plan for the agreed-upon amounts.

Application for KRA Tax Amnesty

Eligible taxpayers must apply for the tax amnesty through the designated system. You are to make your Tax Amnesty 2023 application using the KRA Portal i.e. iTax Portal.
The system will display the taxpayer’s debt status across all tax categories. Taxpayers must select the relevant periods and tax categories that qualify for the amnesty.
Taxpayers can choose to make full payment of the outstanding principal tax or enter into a payment plan agreement with the Commissioner.
Payment plans must be finalized by June 30, 2024. Penalties and interest related to unpaid principal taxes after this date will not qualify for amnesty.
Acceptance of the amnesty terms and conditions signifies the taxpayer’s commitment to adhere to the agreed-upon payment plan.
Amnesty will be granted upon the successful payment of the final installment as outlined in the payment plan agreement.
Detailed instructions for applying for amnesty can be found on the Kenya Revenue Authority (KRA) website, where all taxpayers will be directed for comprehensive application details.

Treatment of Balance of Tax and Monthly Taxes

Taxpayers whose year-end falls in December 2022 can pay the balance of tax by April 30, 2023. Interest and penalties related to principal tax obligations for the year ending December 31, 2022, are eligible for amnesty.

For monthly taxes in December 2022, where the tax point falls on any day in December 2022, payment can be deferred to subsequent months on specified due dates. Interest and penalties related to principal taxes for December 2022 are eligible for amnesty.

Taxpayers are advised that in case of any inconsistency between the provisions of the Revenue Laws and the information provided here, the Revenue Laws will take precedence.

According to the Finance Act 2023, Tax Amnesty was introduced for persons with penalties and interest but has no principal taxes owing for periods up to 31st December 2022; and persons who have principal tax accrued up to 31st December 2022 but pays the outstanding principal tax debt by 30th June 2024.

In the spirit of giving back to taxpayers, Kenya Revenue Authority (KRA) is calling on those who have accrued interests up to December 2022 to take advantage of our Tax Amnesty 2023 programme and pay up the principal taxes and get 100% amnesty on penalties and interest.