Tax amnesty is a temporary offer from the government that allows certain taxpayers to pay a set amount of money and in return, they will have their past tax penalties and interest forgiven and will not face legal prosecution for those past tax issues.
In compliance with the Kenya Revenue Authority (KRA), the Finance Act 2023, introduced the Section 37E to the Tax Procedures Act,2015 designed to waive penalties and interest on unpaid taxes for periods up to December 31, 2022. The Tax Amnesty began on September,1,2023 and was available until June 30, 2024.
However, Members of Parliament proposed an extension to the deadline, to be set on March 31, 2025, in a bid to allow Kenyans who had an outstanding payment and were locked out by the expired deadline to earn a reprieve from penalties and interest.
Here is a step-by-step guide on how to apply tax amnesty:
1. Log into your iTax portal and go to the Amnesty application tab that is under Debt and Enforcement and make the application.
2. Click on the link shared through your Email/SMS which will re-direct you to your iTax page to make the application.
3. If you encounter any queries, you are advised to visit the nearest Tax Service Office (TSO) or KRA help desk located at Huduma Centre for assistance on the application process.
Requirements for tax amnesty
To successfully apply for tax amnesty, the following are the requirements needed to qualify:
1. A taxpayer can have penalties and interest but has no principal taxes owing for periods up to December 30, 2022.
2. A taxpayer can have a principal tax accumulating up to December 31, 2022, but pay the outstanding principal debt by June 23, 2024.
In compliance with the Kenya Revenue Authority(KRA), in the application for the Tax Amnesty, the conditions the taxpayer should observe are:
1. May make full payment of the principal tax due or enter into a payment plan agreement with the commissioner.
The system fully displays the taxpayer’s debt status and they will be required to apply for the amnesty by selecting the periods which qualify for the amnesty. Amnesty shall only be applicable for periods up to 31st December 2022 where all the pending principal taxes have been cleared.
2. For the taxpayer who opts to settle the outstanding principal tax in instalments, he/she will indicate the frequency of payments in the system-embedded payment plan agreement.
Should the proposed extension take effect, the payment plan agreement will not extend beyond March 31, 2025. If there are any interests and penalties relating to the principal tax under the tax amnesty period that are still unpaid after the proposed March 31, 2025, will not qualify for the amnesty.
The Tax Amnesty will be granted upon the payment of the final instalment as agreed in the payment plan agreement.
Should the taxpayer fail to follow the agreed payment plan and does not provide a good reason or solution for the default, enforcement actions will be taken against them.
The taxpayer has to agree to the terms and commit to honouring the payment plan agreement.
Step-By-Step Process
1. Log into iTax, under the Debt and Enforcement menu select ‘Amnesty Application’. The system will populate the amnesty form with two sections.
Section A – contains the taxpayer details where the taxpayer should provide the correct mobile number, email and amnesty details. The amnesty details shall be populated upon selecting the obligation.
All time periods will be automatically selected. If the taxpayer disagrees with the amounts shown, they can uncheck the box. Click ‘Add All’ and repeat this process for all obligations.
2. In Section B, The added amnesty details shall be populated. The Taxpayer shall propose the number of instalments and instalment frequency. The iTax system shall compute the amount per instalment.
3. Click to agree to the terms and conditions and submit. The iTax system will generate an amnesty application acknowledgement with amnesty and payment plan details.
4. To generate a payment slip, click on the Payment menu and select Payment Registration. Select the Tax head and Sub-head you wish to generate payment. Click on the radio button and modify the amount to be paid equal to the principal tax.
It is important to note that the system will not allow the generation of payments with amounts higher than the principal tax due. However, where the principal tax has decimal values, round off the amount to the nearest 1 shilling. Click add, select mode of payment and submit.
5. Once payment has been received in the iTax system shall vacate respective penalties and interest for the period and issue an amnesty certificate.
