Q: What is the 2023/4 tax amnesty?
A: The 2023/4 tax amnesty introduced a waiver of penalties and interest on principal taxes due and payable up to 31 December 2022, if the principal taxes are paid by 30 June 2024.
Q: What is the basis of the tax amnesty?
A: The basis of the amnesty is section 56 of the Finance Act, 2023 which inserted section 37E into the Tax Procedures Act, 2015 providing for the amnesty. Subsequently, KRA published Taxpayer Guidelines on the Tax Amnesty to guide taxpayers on the procedure for application of the amnesty.
Q: When does the amnesty run?
A: The amnesty runs from 1 September 2023 to 30 June 2024.
What taxes are covered by the amnesty?
A: Penalties and interest arising from all domestic taxes payable under the Tax Procedures Act (TPA) including Instalment taxes, withholding taxes, income taxes, Value Added Tax, Excise Duty and miscellaneous fees and levies due and payable for tax periods up to 31 December 2022. However, penalties for tax avoidance under section 85 of the TPA are not eligible for the amnesty.
Q: What are the benefits of the amnesty
A: The amnesty provides you with an opportunity to regularize your tax accounts, clear legacy tax account issues an expunge penalties and interest without going through a discretionary administrative procedure. In other words, the amnesty is automatic, not subject to the wishes of KRA or the Cabinet Secretary National Treasury to grant or not to grant.
Q: What is the procedure to apply for the amnesty?
A: Amnesty is granted automatically if the taxpayer has penalties and interest but no outstanding principal taxes up to 31 December 2022.
A taxpayer with outstanding principal tax should apply for the amnesty through iTAX (under the “Debt and Enforcement” Tab). The taxpayer is required to indicate a payment plan for principal tax, to be honored by 30 June 2024.
Taxpayers should apply for amnesty per tax period e.g. for VAT, the taxpayer should apply for amnesty for every month where there is principal tax outstanding.
Q: What challenges are likely to be faced during the application process?
A: Issues likely to delay or frustrate your application for the amnesty include:
- Unreconciled tax ledgers arising from payments not captured or adjusted assessments;
- Tax debts on the “Legacy System” which was used by KRA before introduction of iTax in 2014. This requires manual reconciliation with the KRA;
- Unresolved tax disputes ongoing through objection processes, the Tax Appeals Tribunal or the Courts;
- Failure to pay principal taxes or provide a payment plan; and
- Failure to adhere to amnesty timelines.
Q: How can East African Tax Consulting (EATC) help with your amnesty application?
A: EATC can assist you in making your amnesty application as follows:
- Advise on your eligibility for the tax amnesty;
- Ascertain any principal taxes due for the periods to 31 December 2022 and make necessary declarations;
- Amicably settle any outstanding tax disputes to ensure eligibility for the tax amnesty;
- Reconcile your tax ledgers to capture all payments and credits that may be missing from your tax accounts; and
- Make applications for the amnesty with a reasonable payment plan.
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