The Finance Act 2020, assented into law by the President of Kenya on June 30, 2020, introduced a series of measures aimed at increasing tax revenue, enhancing compliance, and modernising the tax legislative framework in Kenya. Among these measures, a new Voluntary Tax Disclosure Programme (VTDP) set up by the Kenya Revenue Authority (KRA).

The VDTP will allow taxpayer to disclose previous tax liabilities that have not been disclosed within a period of five years prior to July 1, 2020, benefitting from a waiver of penalties and interest ranging:

From 100% accrued penalties and interest where disclosure is made within the first year of the programme; to
50-25% of accrued penalties and interest where disclosure is made in the second and third year.

For the disclosure to be considered favourably, all principal tax relating to it ought to be paid prior to the application for waiver of penalties and interest under the VTDP, meanwhile submitting all material facts to the disclosure to the KRA.

The taxpayer will not be eligible for the VTDP if he is under audit, investigation or is a party to ongoing litigation in respect of the tax liability.

The VTDP is a significant opportunity for taxpayers wishing to normalise their tax compliance status, and is expected to boost the revenue authority’s tax collections within the period the programme is in effect.

SOURCE: kra.go.ke