Even as the deadline for declaring 2018 income tax returns inches closer, it is evident that more Kenyans are filing their returns than ever before.

Data from Kenya Revenue Authority (KRA) shows that at least 3.2 million taxpayers declared both resident and non-resident returns before 2017/18 financial year closed on June 30, 2018.

This translated to 33.33% increase in tax compliant Kenyans from 2.4 million taxpayers captured by close of 2016/17 fiscal year on June 30, 2017.

By Sunday, June 30, 2019, the taxman envisions to have grown tax compliance by 40% which means KRA targets to receive declarations from at least 4 million taxpayers.

Taxpayers only need to log in on iTax and declare their returns by clicking here.

The same link can be used to a acquire a PIN number for fresh applicants.

Every Kenyan who is above 18 years of age is entitled to one.

The exercise is easy and every taxpayer is expected to undertake it between January 1 and June 30 of every year.

Benefits to taxpayer

  • Apart from being a lawful requirement for all PIN holders to file their returns, the process goes along way to ensure citizens are actively involved in helping the government spur the country’s economy.
  • Among benefits residents who declare their returns get is a clean Tax Compliance Certificate (TCC). This certificate is usually among the key requirements when a person seeks to be employed in a good number of positions in government, parastatals or some international firms.
  • Submission of individual annual income tax returns gives KRA an opportunity to verify if what the employer declared in his PAYE monthly submissions matches what the taxpayer with employment income has declared. In case of a disparity between the two declarations, necessary steps are taken to address the anomaly. It further serves to enhance accountability and transparency so that we don’t have instances where an employer deducts PAYE from their employee’s incomes but fails to remit deduction to the taxman.
  • This process also helps a taxpayer avoid being penalised for not declaring their returns. This penalty accumulates interests and may be burdensome if the state decides to seek legal redress to recover these fees.

Benefits to government

It is shared knowledge that most revenue that trickles into the government’s kitty is sourced from taxes.

  • Honest filing of returns gives the state chance to plan on how it will spend its revenue. These funds are usually injected in development projects for instance construction of roads, hospitals, schools and funding security operations among other key projects.
  • The government is also able to make revenue projections in the subsequent fiscal year. Projections help government identify and lay its short and medium-term plans that it has for the citizenry.
  • It is also noteworthy that declaration or returns enables KRA check tax evasion.
  • In the same light, the deacon can identify entities that can benefit from reduced taxes for purposes of economy stimulation.

Filing of nil returns

You are required to file a nil return if you did not have any source of income in 2018.

Such people include:

1. Students

Any student who acquired for a PIN for purposes of applying for a HELB loan or on any other student assistance but did not engage in employment, business or any other income generating activity.

2. Unemployed

These are people who have been in employment before and were filing and paying taxes but lost their jobs/were retrenched and were not employed elsewhere in 2018 or did not have any other income.

3. Former business owners

This applies if the business was dissolved prior to January 2018 and is no longer operational.

The directors should, however, consider applying for PIN dormancy or deactivation.

4. Retirees

If you are retired and have no other source of income other than your pension and said pension is less than KSh 25,000 per month or KSh 300,000 per annum.

5. If your monthly salary is below the minimum wage of KSh 13,486.

6. If the withholding tax on your income was final e.g. taxes from gaming and lotteries.

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Source: Tuko