Paying Caesar: How to go about filing your taxes

It’s that time of the year again. Every Kenyan who has a Kenya Revenue Authority personal identification number (PIN) has just under 8 weeks to file their tax returns.

Filing returns is required of all citizens, even those who have ‘nil returns’, meaning they fall below the taxable amount bracket or have no income to declare.

If you run a side gig, under law, you’re required to file returns on the business, even if you’ve filed employment returns.

Penalties for not filing returns

The deadline for filing returns is June 30. Failure to meet the deadline may subject you to a penalty of Sh10,000 at the minimum.

Employers who don’t submit returns will either pay 5 per cent of the due tax amount or Sh20,000, whichever is higher.

Where an employer or business is guilty of deliberately trying to evade the system or of submitting late payment of taxes, they could face much larger fines and penalties.

If your business hopes to get a Government tender, you’ll need a valid tax clearance certificate showing that you don’t owe the taxman any money.

Further, without a PIN certificate, you could lose out on opportunities for wealth creation and success because most organisations won’t work with companies that don’t have one.

The process

You no longer need to line up at KRA offices to file returns. There was a time you’d need a whole day just to give the taxman his dues.

Thanks to technology, filing returns is much easier now. You just need to log into the iTax system and can complete the process in less than 15 minutes.

All you need to do is make sure you have all the relevant documents to input your information into the system.

If you’re employed, you’ll get a P9 form from your employer. If you’re self-employed, you need your profit and loss statement. If you’re an individual or a student who already has a PIN but isn’t earning any money, you’ll need to file nil returns.

From your account in iTax, click on the ‘Returns’ menu.  On the drop-down, click ‘File Return’ or if you’re filing a nil return, choose that alternative.

If you have returns to file, the file returns option will redirect you to another page with a tax-resident individual option. Download the Excel sheet and fill in the relevant data. The sheet will do all the necessary computations, including what you owe.

Be very vigilant when you’re filling in the details because an error on the form will make your submission useless. You, however, have the option of filing amended returns, though this will require approvals from your tax station.

When you confirm that all the information is correct, click on validate and then zip the file before uploading it on the system.

Once you submit your returns, KRA will send you an acknowledgment receipt on email.

Filing VAT returns

You need a Z report from your ETR machine, as well as any items you may have purchased that have VAT, including branding or equipment.

Log into the system, click on the ‘Returns’ menu, choose the ‘File Returns’ option, click on ‘VAT Returns’ and download the Excel sheet. Input the necessary information using the Z report and your expense sheet, validate and generate the zip file and save it on your computer.

On the system, input your company credentials and fill in the other necessary blanks, and then upload the zipped file.  Accept the terms and conditions by ticking the box and then submit your form.

KRA will send you an acknowledgment email, and you’ll get a payment slip that you need to fill in, highlighting your payment methods, and the receiving bank.

Once you submit the necessary information, you’ll get a registration number and slip for your payments. Use this at the bank when making your payment and make sure you get a receipt to prove you paid.

Why iTax

This system has simplified the whole process of tax collection. For the end user, you can use the system from anywhere as long as you have access to the Internet, which saves you a lot of time.

You also have complete control of your account and have your records easily accessible anytime you need them.

Best of all, you don’t have to deal with tonnes of paperwork as was the case previously. The system is simple to use, so you don’t need to hire the services of an accountant or broker.

Final thoughts

Don’t wait until the last minute to file your returns because the system does tend to go down when there’s high traffic.

Also, if your returns are less than Sh70,000, you can use the M-Pesa paybill 572572 to make payments.

The writer is a business training consultant and co-founder of Founders Breakfast Kenya.