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The benefits of filing your tax returns on time

Barely two weeks remain before the June 30 deadline for Kenyans to file their 2021 income tax returns. 

Do you know why it is important to file your taxes? What does the law say about filing taxes?

According to Section 52B of the Income Tax Act (CAP 470), every person/entity is required to submit a return of income to the KRA Commissioner of Domestic Taxes not later than the last day of the sixth month following the end of his/her year of income.

This means that if your year of Income ends in December (like most persons) then you are required to file a return by June 30 of the following year. This is why KRA asks you to submit your tax returns for the previous year between January 1 and June 30 of the following year.

Kenya Revenue Authority (KRA) is the principal revenue collection agency for the Government of Kenya. 

Why Filing taxes is important 

First, it prevents your PIN from being used for illegal purposes. 

Mr. Julius Yiega, KRA Chief Manager for Taxpayer Services, Domestic Taxes Department says just by filing tax returns, even nil, KRA would be notified if your PIN has been used for any illegal business that you might not be aware of.

He says that in the past, some people’s bank accounts were used to channel money from unverified sources. This is because people get crafty and use PINs to do business without the PIN’s owner being aware.

He says someone can use the PIN and get a withholding certificate. As such when you file taxes, especially, if it happens to be nil returns, then KRA will confirm with you concerning the withholding certificate which is a document that shows the amount of tax withheld. 

“That will let you know that somebody is abusing your documentation,” he said in an interview with The Standard Group’s Spice FM. 

Enables you to get refunds from the taxman

In some instances, where applicable, you may qualify for a tax refund. 

“KRA does not just take from you. There are times when KRA comes to refund you. How can we refund you when we cannot reach you?” Mr Yiega poses. 

“You may be surprised that you are so rich here because the government owes you money.”

He says your details should be updated regularly. This means if you change location, KRA should have the latest address.

Ascertains the deductions from your income were submitted

Paying taxes on time means that you will be abiding by the law and beyond that, for those with employment income, for example, it also gives you an opportunity to ascertain that the deduction from your income was submitted as tax to KRA by your employer.

Filing your tax returns enables the tax authority to reconcile the tax deducted by employers’ under the Pay As You Earn (PAYE) system and the declarations made by employees the following year.

Returns filing, therefore, enhances accountability of taxes deducted from employees, explains KRA.

Spares you penalties and interests

Late filing and non-filing of tax returns attract penalties and interest for individuals and companies.

For individuals, a late filing penalty of five per cent of the tax due or Sh2,000 is chargeable and the late filing penalty for non-individuals is five percent of the tax due or Sh20,000 whichever is higher. Late payment interest at 1 per cent per month is also applicable until the tax is fully paid, according to the KRA website.

Filing tax returns is a legal requirement. Every Kenya with taxable income is required to assess themselves and declare the income earned during the year and pay any taxes due. ​

Where you can get assistance to file your returns.

All KRA services are free. If you do not know how to file, here’s where you can find assistance

  • Call the KRA Contact Centre via 0711099999
  • Email KRA through [email protected]
  • You can chat with a KRA agent via https://kenya-revenue-authority.custhelp.com/app/chat/chat_launch
  • Visit/Walk into the nearest KRA Office. 
  • Send a Direct Message (DM) to any of the KRA Official Social Media pages.

KRA has also developed simple tutorials on how to file that can be accessed from the KRA Website or their official YouTube page.

For those who had no source of income in 2021, you are still required to file a NIL return. You can do this via iTax or the KRA M-Service mobile application available on both Android and iOS for iPhone users.