Businesses set to enjoy one-year tax amnesty on penalties, interests
By John Otini, April 28, 2023
National Treasury has proposed a one-year amnesty on penalties and interest for accrued tax debt. The move is aimed at boosting revenue collection and encouraging tax compliance, especially among small and medium-sized enterprises.
Data from National Treasury shows that tax debt in the country is estimated at Sh1.5 trillion, with many businesses struggling to meet their obligations. The proposed amnesty would offer relief to these businesses by allowing them to pay the principal tax and receive a full waiver of penalties and interest.
Debt portfolio
“In order to reduce the growing tax debt portfolio, we propose a year’s amnesty on penalties and interest for the accrued tax debts,” Treasury said in the proposed Bill.
The proposal, which is part of the Finance Bill 2023, has been welcomed by various stakeholders, including tax experts and business leaders.
They believe that the amnesty will provide much-needed relief to businesses that are struggling to stay afloat due to the pandemic.
Treasury said that the amnesty would help to reduce the tax debt and encourage more businesses to pay their taxes. He also urged businesses to take advantage of the amnesty to clear their tax debt and avoid future penalties and interest.
However, there are concerns about the potential impact of amnesty on revenue collection and tax compliance in the long term. The amnesty may encourage businesses to delay paying their taxes in the hope of getting a similar amnesty in the future.
To address these concerns, the National Treasury has stated that the amnesty will only apply to tax debt accrued up to June 30, 2022. This means that businesses will not be able to take advantage of the amnesty in the future.
The proposed amnesty is just one of several measures aimed at boosting revenue collection and supporting economic recovery in Kenya. Other measures include the reduction of tax rates for small businesses and the introduction of tax incentives for investment in key sectors such as agriculture and manufacturing.