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The Finance Bill 2023 is proposing a tax amnesty aimed at contributing to the taxman’s attempt to enhance compliance, if adopted.

Tax experts at Cliffe Dekker Hofmeyr say the move builds on the success of the ongoing Voluntary Tax Disclosure Programme (VTDP), which by March 2023 had enabled the Kenya Revenue Authority (KRA) to collect Sh9.3 billion.

“Our firm participated in the Finance Bill 2023 process by forwarding proposals to the National Treasury. Among the many proposals that made it to the Bill, we singled out the inclusion of the tax amnesty programme which was a unique proposal,” the firm said in a statement.

The proposal, if finally adopted in the Finance Act 2023, will be an extension of the success of the ongoing Voluntary Tax Disclosure Programme.

More taxpayers

The VTDP has registered some success. Cumulatively, over 19,021 taxpayers enrolled for the programme with an estimated revenue collection of Sh10.4 billion. As at March 2023, KRA had collected Sh9.3 billion through the programme.

Tax amnesties generally benefit taxpayers by reducing their tax liabilities and giving them criminal immunity. Amnesties are also known to provide benefits for the tax administration, particularly in terms of the tax revenue they bring in and future compliance.

The Finance Bill 2023 comes even as KRA is keen to collect tax within 24 hours if not in real time.

A couple of amendments have been introduced in the Bill to facilitate this including the codification of electronic tax invoice management system and the requirement to account for Withholding Tax within 24 hours.

Members of Parliament have already begun a month-long recess to allow them scrutinise budget estimates that will be presented in Parliament on June 8 by National Treasury Cabinet Secretary Njuguna Ndung’u. Through the Departmental Committee of Finance and National Planning, parliament has also invited the public to submit their views on the Bill by May 20, before it is approved by Parliament and accented into law in June.

According to the Budget Policy Statement, the Government intends to mobilise domestic revenues to the tune of Sh2.9 trillion.