What is KRA?
The Kenya Revenue Authority (KRA) is an organization tasked with collecting taxes to run day-to-day government activities. By law, every Kenyan participating in some form of economic activity is required to pay tax. Although this requirement is by law, a majority of Kenyans fall short of this requirement.
To ensure compliance, KRA imposes penalties on those who fail to meet their tax obligations. The tax penalties can be serious and may have implications on the finances of taxpayers.
In this article, we will discuss the penalties imposed by KRA and the reasons why they are imposed.
What Are Some of The Penalties Imposed by KRA
KRA imposes several penalties on taxpayers who fail to meet their tax obligations on time. The affected taxpayers are then required to pay the fines imposed. Some of the most common penalties include:
Late Filing Penalty
KRA normally sets a definite date for filing returns. Filing late attracts a penalty. This penalty is imposed on taxpayers who fail to file their tax returns by the due date. Important to note, that the penalty may attract interest if time goes by and it has not yet been settled.
Late Payment Penalty
This tax penalty is imposed on those who fail to pay their taxes by the required time.
This penalty is imposed on taxpayers who fail to pay their taxes by the due date. The penalty is normally calculated as a percentage of the tax owed and increases if not settled.
Under-Declaration Penalty
Failing to declare tax liability or declaring false values attracts the under-declaration penalty which is calculated as a percentage of the owed tax. Important to note, it also increases if not settled.
Interest on Late Payment
Being late in submitting your payment can also attract a penalty from the tax-collecting organization. Late payments attract a certain amount of interest which is 1% per month.
Why Does KRA Penalize Kenyans?
There are various reasons why KRA imposes penalties on Kenyan taxpayers. Some of the most common reasons include:
Failing to Comply
KRA imposes penalties on taxpayers who fail to comply with their tax obligations. This includes failing to file tax returns, pay taxes on time, and keeping proper tax records.
Failing to Comply Deliberately
Unlike failing to comply unknowingly, failing to comply deliberately attracts higher tax fines. Remember as stated earlier, it is required by law for every individual to submit their taxation information and pay tax.
Examples of deliberate noncompliance include deliberately under-reporting income, overstating deductions, and failing to disclose all sources of income.
False / Inaccurate Information
It is important to note that KRA will fine you if you provide false or inaccurate information. This includes providing incorrect information about income, deductions, and tax credits.
Not Keeping Proper Records
Tax payers should keep proper records of their income and expenses. This includes keeping receipts, invoices, and other documents that support their tax returns. Failure to keep these documents may result in a fine by KRA.
Wrapping Up
To wrap up everything, KRA imposes penalties on taxpayers who fail to meet their tax obligations. To avoid these penalties, taxpayers should comply with their tax obligations and keep proper records of their income and expenses as well as any other necessary information that is important.
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