The State through the Tax Procedures (Amendment) Bill, 2024 is seeking to extend the Kenya Revenue Authority’s (KRA) Tax Amnesty Programme to rope in more Kenyans in the tax bracket.

The Bill proposes to extend the tax amnesty period from June 30, 2024, to June 30, 2025, allowing more taxpayers to benefit and enabling the government to collect unpaid principal taxes through the additional year.

It also introduces a provision for tax recovery relief, allowing the Cabinet Secretary for Treasury to grant relief in cases where tax recovery is impossible, unduly difficult, expensive, or inequitable.

In the new proposal, the Commissioner would refer such cases to the CS, who may approve partial or full relief. The CS is required to publish the names of taxpayers granted relief and the reasons for doing so every four months in the Gazette, with these notices also presented to the National Assembly for approval or annulment.

“The Bill presents an opportunity for the government to amend the proposed provisions so as to extend the amnesty to cover taxes that have accrued after December 2022,” the public notice read in part. This extension follows pressure from small traders and lobby groups who pushed for the continuation of the programme, which had proven successful.

Penalties and interests

The Finance Act, 2023 introduced the tax amnesty programme, allowing taxpayers to apply for amnesty on penalties and interests on tax debt for periods up to December 31, 2022.

The programme, which ran between September 1, 2023, and June 30, 2024, provided much-needed relief to taxpayers with outstanding tax obligations.

During this period, the KRA collected Sh43.9 billion from 1,064,667 taxpayers, waiving penalties and interest totalling Sh507.7 billion, benefiting 3,115,393 taxpayers. Under the amnesty programme, taxpayers are only required to pay the principal tax amount of their outstanding tax debts. Taxpayers liable for tax avoidance penalties do not qualify for the programme, and only interest and penalties can be waived.

KRA is the sole authority to approve the amnesty, and no specific reason is needed to grant it, with the programme restricted to taxes accrued up to December 2022.

In contrast, the proposed CS tax relief would allow all taxes, including principal amounts, to be considered for relief. The relief must be approved by both the Cabinet Secretary and the National Assembly, with the Commissioner required to provide reasons for proposing the relief, and the relief is not limited to a particular period of accrual. In addition to these amendments, the Bill also proposes changing the computation of time for lodging objections to exclude Saturdays, Sundays, and public holidays (“excluded days”).

According to consulting firm PwC, the computation of time for lodging objections references Sections 52, 53, and 54 of the Tax Procedures Act (TPA), which pertain to appeals to the Tax Appeals Tribunal (TAT), the High Court, and the Court of Appeal. However, the wording of the Bill seems to limit the application of this provision solely to “objections to the Commissioner.”

Court of Appeal

PwC suggests that the Bill should be amended to ensure the provision applies not only to “objections to the Commissioner” but also to appeals to the TAT, the High Court, and other courts. The matter is currently pending before the Supreme Court, which is set to determine the issue on its merits, with a stay order in place suspending the judgment of the Court of Appeal.

PwC notes that if the SCoK upholds the CoA judgment, Section 37E of the TPA will be deleted. Consequently, the proposed amendment to extend the amnesty, as envisioned under the Bill, may lack a proper legal foundation, as the provision it seeks to amend would no longer exist.