With Kenya Revenue Authority (KRA) updating its iTax portal to be in tandem with the Finance Act 2023, the main question that Kenyans are asking is whether the government will backdate the taxes for the period the act was suspended or implement the new orders from the day the suspension was lifted by the courts.
Read more: Kenya Revenue Authority (KRA) Updates iTax Portal, Introduces New Charges Under Finance Act 2023
The Finance Act 2023 is a crucial piece of legislation that will enable the government, through the KRA, to collect the projected revenue of FY 2023/2024 of Kshs 3.0 bn and majorly finance its Kshs 3.6 bn Budget estimates for the FY’2023/2024.
Backdating of the taxes during the period the Finance Act was suspended would mean the taxpayers would be required to pay the applicable taxes that would have been in effect from 1st July 2023 and through the suspended period, assuming the act was never suspended,
However, the government might start the implementation of the Act after suspension orders are lifted. This approach would mean that taxpayers would only be accountable for their tax liabilities after the end of the suspension period.
While backdating taxes could help the government recover potential revenue losses, it may impose an undue burden on taxpayers. On the other hand, implementing taxes only after the suspension is lifted may offer clarity and fairness but could lead to revenue losses for the government.
Read more: KRA Sustains Growth in Tax Collection as Revenues Surpass the Kshs 2 Trillion Mark
In essence, this situation presents an inevitable dilemma for the government that requires careful consideration of economic repercussions, legal consequences, and fairness elements before reaching a decision. Engaging in extensive discussions with stakeholders, including taxpayers and legal experts, could be prudent to establish a consensus on the most suitable approach. Ultimately, this scenario offers valuable lessons for the government in handling similar situations in the future.
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