Kenyans to pay KSh.100,000 fine for every false entry in tax return

Kenyans filing tax returns will now face a KSh. 100,000 fine for each false or incomplete information presented to the Kenya Revenue Authority (KRA) as the State intensifies its crackdown on tax evasion.

The penalties for the information breach, which also carries a three-year jail term, will also apply to employers and business partners. This is according to the Finance Bill that is before Parliament and seeks to review a number of taxation laws.

“A person who makes a false statement or omits any information required to be included in an information return under 6B shall be liable to a penalty of one hundred thousand shillings for each such false statement or omission to imprisonment for a term not exceeding three years,” reads the Bill.

The penalties, if approved by Parliament, will take effect from July 1, 2021 and come at a time when millions of taxpayers are racing to file their tax returns ahead of the June 30^th deadline.

More than 4.4 million taxpayers filed their returns in the year to June 2020, below KRA’s target of 5.5 million.

The amendments also propose a Ksh. 1 million fine for financial institutions, including banks, insurance and investment firms, that the KRA relies on for records on tax compliance.

“A reporting financial institution that fails to file an information return or a ‘nil’ return when required under section 6B shall be liable to pay a penalty of one million shillings for each such failure,” says the Bill.

The proposals come months after KRA rolled out a voluntary tax disclosure program where taxpayers with arrears for the past five years are to get full or partial relief on penalties and interest on the undisclosed taxes.

The latest data shows that KRA collected Ksh176.66 billion in April, exceeding its revised collection target for the month by 3.8 percent and marking the fifth time in a row that it had outperformed monthly goals. The taxman attributed the performance to “enhanced by the sustained implementation of compliance efforts, revenue enhancement initiatives and improved service delivery”.