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What to note about tax evasion and its consequences in Kenya

In Kenya, Kenya Revenue Authority (KRA) is charged with the responsibility of collecting revenue on behalf of the Government of Kenya.

However, in the wake of crackdown on tax evasion in the country, KRA issued a statement on Thursday about the ‘tax evasion’ with key notes on what one/entity should look out for before being purged in the crime.

“KRA is determined to pursue those who have deliberately chosen to evade taxes through various practices including the following; Failure to disclose fully the income they have earned, mis-statement of expenses to reduce the taxable income and therefore evade taxes.” Reads the statement in part.

Others include;  Failure to pay the correct import taxes through concealment of goods, misdeclarations and undervaluation among other schemes , failure to withhold and remit taxes as required by law and any other non-compliance with tax laws

The taxman maintained that no one or any organization/business will be spared in paying of tax in the country and that everyone shall be treated equally

“It is our intention to ensure that all persons who are required to pay taxes do so for the good of this Country. We shall treat all taxpayers with respect and afford them the desired level of services.”

Difference between tax evasion and tax avoidance

The revenue collected in the country is critical in funding service delivery to the citizens and in achieving Kenya’s Transformation Agenda. Those caught evading taxes, therefore, are generally subject to criminal charges and substantial penalties.

Essentially, the difference between avoidance and evasion is legality. Tax avoidance is legally exploiting the tax system to reduce current or future tax liabilities by means not intended by parliament. Tax evasion is an illegal action in which a person or entity deliberately avoids paying a true tax liability.

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