Answer ... Every company chargeable to tax is required to furnish the Commissioner with a self-assessment return of tax from all sources of income by no later than the last day of the sixth month following the end of its accounting period.
Instalment tax is a form of advance corporation tax and is a credit against the company’s corporate tax liability. It is payable only by companies whose annual corporate tax is in excess of KES 40,000 (approximately $400). Instalment tax is payable by the 20th day of the fourth, sixth, ninth and 12th months following the company’s accounting year end.
The balance of tax is the difference between the company’s instalment tax paid in advance and the actual corporate tax liability of the company. This balance of tax is payable before the last day of the fourth month following the end of the company’s accounting year.
Pay as You Earn (PAYE) is the method of collecting income tax at source from individuals in gainful employment. PAYE is payable on salary, benefits and any other emoluments received by an employee by virtue of employment. An employer ought to remit PAYE by the ninth day of the subsequent month in which the tax falls due.
If registered for value added tax (VAT), a company ought to submit VAT returns and pay VAT by the 20th day of the subsequent month in which the tax falls due.
Answer ... For instalment tax, any underpayment will be subject to a penalty of 20% of the difference between the amount of instalment tax payable in respect of a year of income and the instalment tax actually paid.
For the balance of tax, a penalty of 5% of the amount of tax payable under the return or KES 20,000 ($200), whichever is the higher, is payable in case of failure to remit on time.
Regarding PAYE, a penalty of 25% of the amount of tax involved or KES 10,000 ($100), whichever is greater, is payable. All directors and officers of the corporate body concerned with its management shall be guilty of an offence unless they prove to the satisfaction of the court that they did not know, and could not reasonably be expected to have known, that the deducted amount was not remitted, and that they took all reasonable steps to ensure that the offence was not committed. Those found guilty shall be liable to a fine of between KES 10,000 ($100) and KES 200,000 ($2,000), imprisonment for a term not exceeding two years or both.
For VAT, a penalty of 5% of the amount of tax payable under the VAT return or KES 10,000 ($100), whichever is higher, is payable for failure to file VAT returns.
Answer ... Kenya signed the Convention on Mutual Administrative Assistance in Tax Matters on 8 February 2016, which has brought into force the Common Reporting Standard. This provides for all forms of administrative assistance in tax matters, such as the exchange of information on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examination and assistance in tax collection. While its provisions are not yet in force, the government of Kenya intends to operationalise its provisions in 2019 in an effort to capture offshore income accrued by Kenyans and not previous disclosed to the KRA.