Kenya’s National Assembly is considering a bill that could provide a significant reprieve to businesses and tax collection agents, by allowing the government to waive penalties for delayed remittances in certain circumstances.
The Kenya Revenue Authority (Amendment) Bill, 2024, introduced by Leader of Majority Hon. Kimani Ichung’wa, proposes granting the Cabinet Secretary for National Treasury the power to waive penalties imposed on agents who fail to transfer collected taxes on time, provided the delays are unintentional or due to financial distress.
The proposed legislation aims to amend Section 15a of the Kenya Revenue Authority Act (Cap. 469) to empower the Treasury Secretary to waive penalties in cases where the delay was caused by system downtime, receivership, or statutory management, among other valid reasons. According to the bill, “The Cabinet Secretary may waive part or the whole of the penalty due under subsection 3.”
For businesses, this proposal could mean relief from the burden of penalties that are often passed on to them by agents. In the past, agents have typically transferred the cost of penalties to traders when they delayed remitting collected revenues, resulting in substantial financial losses for businesses. By stopping this practice, the bill aims to shield companies from the financial strain caused by circumstances beyond their control.
The bill also stipulates that any waiver would only be considered if the agent’s delay in remittance was inadvertent or occurred under conditions such as system failures or the agent being placed under receivership. This condition is designed to ensure that the waiver is not exploited but rather used to assist agents and businesses facing genuine difficulties.
Additionally, the bill includes provisions to enhance the administrative capabilities of the Kenya Revenue Authority (KRA). It proposes allowing the Commissioner-General of KRA to appoint Deputy Commissioners, a move aimed at streamlining operations within the authority. The bill also seeks to expand the role of the Kenya School of Revenue Administration, potentially allowing it to collaborate with other institutions of higher learning to broaden its educational offerings.
The proposal comes at a time when businesses in Kenya are grappling with economic challenges, and the potential waiver of penalties is seen as a crucial measure to support the business community.
The public has until September 9, 2024, to submit their views on the bill to the Clerk of the National Assembly, after which it will be further deliberated.
