You might fail to pay your taxes or file your returns on time due to various circumstances. For instance, the systems fail you, you’re overwhelmed with other obligations that you forget, or you don’t have the necessary information/documents. Whether you made an effort and failed or you simply couldn’t manage to file your returns, KRA will penalise you. You attract a penalty every time you fail to file your taxes on time, and the unpaid tax gains interest every month. Hence the need for a KRA waiver.
For individuals, you attract a penalty of Ksh 2,000 or 5% of the tax due per year. Businesses that fail to file their returns on time attract a penalty of Ksh 20,000 or 5% of the tax due. Employers must file PAYE returns by 9th of the following month and failure to do so attracts a penalty of Ksh 10,000 or 25% of the tax due. An interest of 1% per month is charged for unpaid taxes.
Unpaid penalties and interests prevent you from getting a Tax Compliance Certificate even if you have paid your taxes and filed your returns. You can apply for a waiver of the penalties and interests if you have a sufficient reason for failing to file your returns on time.
Some of the reasons may include:
- Lack of funds
- System failures
- Illness or death of the taxpayer
- Failure by accountant/ tax agent
- Delayed PIN activation
Some reasons that cannot be accepted include:
- Forgetting to file
- Travelling
- Not knowing how to file returns
Note: KRA cannot waive penalties or interests charged for tax fraud or evasion
A waiver is only granted upon request. This is done through a waiver application where the applicant addresses their application letter to the Commissioner with details of why they didn’t file their returns on time. The application must be accompanied with supporting documents and evidence to increase the chances of getting approved. The commissioner has the discretion to accept or deny the request. Here’s a guide on how to apply for a KRA waiver on penalties and interests.
Qualifications to apply for KRA penalties and interest waiver
- Filed all returns
- Paid the principal tax due
Requirements to apply for KRA penalties and interest waiver
- Application letter
- Supporting documents
- Statement of account
- Proof of principal tax payment
Process to apply for penalties and interest waiver
- Visit the iTax website and log in to your account
- Go to the Debt and Enforcement tab then click Request for Waiver of Penalties and Interests
- Upload your waiver application letter and the supporting documents such as bank statements, medical reports, death certificate etc. The waiver application letter should be written before starting the application process. It should contain your information, the recipient’s information, a brief introduction, clear explanation and reason for request, your request e.g a full waiver or partial, and a conclusion
- Select the tax obligation associated with the penalties and interests
- Under Tax Type, select Penalty, Interest or Both
- Review the section and select Add All if the details are correct
- Click Submit and select Ok to confirm your application
- You will receive a confirmation message that reads “Your request for waiver has been completed successfully”
- You will also get a download link for the acknowledgment receipt. Click on the link to save it.
- Every successful application is given a reference number for tracking
- You may receive a request through your email address to provide more supporting documents and you will have 30 days to respond
- The assessment usually takes 60-90 days. You may follow up on the status of your application on the iTax website. Go to the Debt and Enforcement tab, click Waiver Application then select Consult Waiver Request Status. Enter the reference number then view your application status. The status will show Pending, Approved (Partial/Full), or Rejected.
- Alternatively, you can call or email the Debt Management Office [email protected] or [email protected]
- If your waiver application is rejected or partially approved, you’re supposed to make the full payment of the amount that is not waived. KRA will state the amount due and timeline to make the payment