The Finance Act 2020 (the Act), which was assented to by President Uhuru Kenyatta on 30th June 2020, introduced a wide range of tax and other measures aimed at raising additional revenue for the financial year 2020/21. Among the measures introduced by the Act is the Voluntary Tax Disclosure Programme (the VTDP).

The program is designed to assist taxpayers achieve tax compliance, by allowing them to voluntarily declare their historical tax liabilities to KRA and settle the principal tax, while obtaining the benefit of not having to pay, under certain conditions, the resulting penalties and interest.

The tax program will run for a period of 3 years with effect from 1st January 2021 to 31st December 2023.

The tax applies for all taxpayers provided that: –

1. The tax liabilities were accrued by the taxpayer within a period of 5 years prior to 1st July 2020.

2. The taxpayer is not under audit or investigations and is not party to ongoing litigations in respect of tax liabilities or any matter relating to the tax liabilities.

3. The taxpayer has not been notified of a pending audit or investigation by the commissioner.

The key benefit for the taxpayer is that: –

1. They qualify for relief in respect of the penalties and interest.

2. Shall not be prosecuted with respect to the tax liabilities disclosed.

The taxpayers who opt for the program will be entitled for the following: –

1. 100% waiver, if the principal tax is disclosed and paid within the calendar year 2021

2. 50% waiver, if the principal tax is disclosed and paid within the calendar year 2022

3. 25% waiver, if the principal tax is disclosed and paid within the calendar year 2023

No waiver of the penalties and interest will be available if the principal tax is paid after the third year.

It’s important to note that the relief of payment penalties and interest and prosecution shall be withdrawn by the commissioner where: –

1. The commissioner discovers that the taxpayer failed to disclose material facts in respect of the relief before the expiry of the agreement entered into with the taxpayer.

2. The taxpayer fails to meet the term of the agreement entered into with the commissioner

To take advantage of the program, please contact us for: –

1. An internal tax review to ascertain your status particularly for non-disclosures and incorrect reporting.

2. Arising from the review, we quantify the exposure and make declarations to KRA as soon as possible in order to obtain full benefit of the relief available.

For more information on this, please feel free to contact:

Benson Ngugi – benson.ngugi@attorneysafrica.com

Ken Rutere – ken.rutere@attorneysafrica.com

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