Counties fined heavily for non-remittance of income taxes

Seventeen counties have been slapped with huge fines for late remittance of their employees’ income taxes for June.

The Kenya Revenue Authority (KRA) is demanding Sh216 million from the counties, which is fines and accrued interest, an expense that will ultimately be borne by citizens.

Kiambu and Kisumu top the list of defaulters at Sh96 million and Sh72 million respectively, in the cumulative debt of Sh829 million in income taxes the 17 counties failed to remit.

Others are Mombasa (Sh68 million), Machakos (Sh67 million) and Meru (Sh58 million).

Good time

While the counties have not contested the taxes due, they heaped blame on the office of the Controller of Budget (COB) for the fines.

They said Controller of Budget Agnes Odhiambo did not approve their disbursements in good time, causing the delays.

Before money is released from the Exchequer, it must be approved by the COB.

It could, however, not be established immediately how the other 30 counties were able to settle the taxman’s dues to escape the hefty fines.

Alloys Ager, the head of Kisumu Governor’s Press Unit, said disbursements received from the national government for salaries was net of the statutory deductions.

Income tax, workers’ retirement savings to the National Social Security Fund and monthly deductions for the State-run healthcare insurer are surrendered in a different batch, he added.

“By the time the accounts were closed for the financial year ending June 30, the COB had only released to us the actual salaries and not the amounts for statutory deductions,” said Ager.

Kiambu county government spokesperson Elizabeth Wambui said a similar fate befell her county.

Her Mombasa County counterpart Richard Chacha said the National Treasury released the funds on June 28, a watershed period where the systems are closed and no transactions are allowed.

“We have the money in the bank but could not remit it at the time owing to procedures. We have informed KRA and hope that they would not surcharge us for the delayed remittance,” Chacha said.

Employers, including government departments and counties, are required to remit the deducted income taxes, commonly known as Pay As You Earn (PAYE), by the 9th day of the following month.

Odhiambo had not responded to our questions on why her office was being blamed by the time the paper went to press.