Justus Ondari
4 July 2009
Nairobi — If you manually filed your income tax returns by the close of the June 30 deadline, know that when you do it next year, it will be online.
This is because an electronic tax system, which the Kenya Revenue Authority has been implementing since last year, is almost in place.
In fact, the Integrated Tax Management System (ITMS) was supposed to be fully operational before last Tuesday's deadline save for a slight delay, according to Fidelis Mulei, the commissioner of domestic taxes, domestic revenue, at KRA.
"From this month, filing of tax returns will be online. We will never have another cycle of mass manual filing of returns again," Mr Mulei told the Sunday Nation about the system KRA developed with the assistance of the Chilean Government.
Initially earmarked for domestic taxes only, the system has been expanded into a KRA online service.
The first phase of its rollout is complete and already filing of VAT (Value Added Tax) returns is accessible online, with a system allowing online instruction of taxpayers banks yet to be activated.
PAYE (Pay As You Earn) filing is due to go online on June 9th.
Second phase
The rollout of the system's second phase, which will see all services accessible online including development of tax account and data management, is ongoing and will soon be complete.
"We are talking about weeks and months not years," said Mr Mulei.
This will enable taxpayers to submit their returns, generate e-slips, forward instructions to their banks to remit the money to KRA and even verify their accounts online.
"This will increase our efficiency and accuracy of risk profiling," he said.
Once complete, taxpayers will be able to file their returns within the stipulated time, for example, six months after the close of their accounting dates for income tax.
This will speed up the processing of the returns, which are expected to hit a record 900,000 mark up from 856,000 received in the 2007/08 fiscal year. As at June 29, the taxman had received 800,000 returns.
It is worth noting that any late filing of the returns attracts a penalty equal to 5 per cent of the tax being declared or a minimum of Sh1,000 for an individual and Sh5,000 for a company, whichever is higher
While companies can file their returns any time depending on the closing dates of their financial years, it is mandatory for all individual taxpayers to file their returns by June 30.
But does KRA process the returns given their numbers?
"We have a contractual obligation with the Commissioner General to process all the returns by December 12, 2009 at our central processing centre to capture the data," explained Mr Mulei.
He, however, says taxpayers are free to file their returns between January 1 and June 30 since the authority releases the requisite forms early.
This year, the authority released the forms as early as February to all firms with over 150 employees.
After processing, they will then send the returns to their respective stations where they will be re-examined, reviewed and screened using a set criteria.
And if you did not file your returns or wrongly filed them, watch out. For under the audit station managers, the returns will be subjected to computational and technical audits before being certified as fully and correctly declared income returns.
"If your returns are substantially wrong, we will reject them and act according to the nature of the mistakes," says Mr Mulei.
If they are small errors, then they will ask you to file for the second time and this means you will be late and hence liable to the penalties.
But if they are serious errors, they will come for an in-depth audit which may lead to your prosecution.
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