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5 Things To Remember As You File Your Tax Returns

Posted on 2017-06-25
5 Things To Remember As You File Your Tax Returns

The time to file your taxes is coming to a close and fast and if you are like most Kenyans, you probably have not completed it yet. If you are what people would refer to as an ‘African Timer’-often to mean you do have much respect for time and deadlines-then you are probably waiting for the very last day-June 30th- to file your returns.

On the other hand, there are those who do not plan to file any returns or have never filed at all for various reasons. These reasons to not comply vary from ignorance to just the hope you will never get caught.

Whatever your reason, below are five things to look out for as your try to beat the deadline:

  1. iTax Portal:
  2. Thank God for technology because we would still be suffering the long intolerable queues that were often witnessed while filling tax returns for the previous year.

    The Kenya Revenue Authority which is the body tasked with responsibility of tax collection launched a web-based system to make tax collection easier. They called it iTax.

    The iTax portal has simplified lives for millions of Kenyans in as far as filing their tax returns is concerned and has also cut down on the total amount time it used to take to file returns.

    Unlike the shortcomings of the earlier manual system, the iTax system is automatic, updates the ledgers-be the employees or employers’ ledger-in real-time after filing and sends out notifications on whether the returns have been filed successfully or have been rejected.

    iTax can be used to file returns for all returns that include Pay As You Earn (PAYE), Value Added Tax (VAT), Individual annual Income Tax Return, and agency revenue that includes Sugar Development Levy and Kenya Bureau of Standards.

    To login, you will need to have registered with the portal and use your user name on KRA personal identification number (PIN) to log in. you will have to download the specific return you want to file for, file offline and generate a zipped file for upload once are done.

    With iTax, you as the taxpayer and as an employee; you are able to keep track on if your employer is remitting the correct deductions as they should. You are also able to keep record on your payments and therefore follow up if there are any refunds to be made by the tax collector.

    The portal offers you the convenience of filing from wherever you are so go ahead and beat that deadline.

    For those who might not be tech savvy, KRA has set up iTax support centers in major towns across the country open from 7 am to 9 pm.

  3. You have to file even when unemployed:
  4. Any person above the age of 18 years old with a KRA PIN number and has a registered iTax account is required to file their returns at the end of each financial year.

    Having not earned anything within that year does not exempt you. What one is required to do is to file under the option of ‘Nil Returns’.

  5. Filing your returns late will attract penalties:
  6. The penalty for not filing your Income Tax returns in time was last month raised to 20 times the initial amount.

    Those who do not file their 2016 returns within the stipulated time will now have to deal with a Sh 20,000 penalty up from KSh 1,000.

    You will also attract a 2% interest rate for the unpaid tax every month that you do not make the payment.

    Deciding to not pay your taxes at all regardless what tax obligation you are under may attract up to 200% and or a fine or imprisonment.

    If you however make your declarations, that is you file the returns but do not actually make the payment, then you attract a 20% penalty and a 2% interest for every month that you do not pay.

    Under-declaration on the other hand could attract a 200% penalty on the under declared amount.

  7. How to make payment for your declared returns:
  8. It is one thing to declare your tax returns and another to make payments. Making your declarations is not the end of the tax paying process, you have to make the actual monetary payment.

    As mentioned earlier, iTax came to make all our lives easier and you can actually make tax payments before you file your returns. The two are not linked on iTax so what one needs to do is make sure that your returns match your payment receipts.

    To make sure that your payments match with your returns, you will have to generate a Payment Registration Number (PRN) through your iTax profile.

    The PRN is an electronically generated bar code with a unique serial number that and must be quoted when making payments to allow your ledger to be updated.

    Most Kenyan banks are eligible to handle your tax payments to KRA and one can pay via cash, cheque or Real Time Gross Settlement (RTGS).

  9. Tax clearance certificate
  10. Most government jobs and even some in the private sector are requiring candidates to have a tax clearance certificate.

    The certificate is basically proof that your tax compliant but you cannot get it if you have not been filing your returns or have filed but have not actually made payments.

    KRA guidelines on your eligibility to receive a tax compliant certificate say you must have met your tax obligations as per the tax laws and that includes filing for tax returns for the registered tax obligations, have made payments of the assessed taxes and to have declared the correct income.

    So, the next time you think that maybe paying your taxes and filing your returns is not that important, remember you could be locking yourself out important jobs and government tenders.

    Applying for tax compliant certificate can be done through your iTax profile and if you meet all the set standards then you will receive your certificate from KRA through your email.

    If for some reason you are short of meeting one requirement, then you are notified on the areas of non-compliance

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