What is a waiver application?
Where taxpayers fail to pay their taxes or file returns by stipulated due dates, penalties and interest are charged in accordance with the law. The penalty and interest are tax that are payable. However, they may apply to the Commissioner to remit such penalties and interest.
This provision covers only penalty and interest. The principal tax has to be settled in full.
This application by a taxpayer for consideration for penalties and interest to be vacated is what is known as a waiver application. The Commissioner may remit the penalty and interest in whole or partially, depending on justification and evidence presented.
Penalty and interest charged under fraud or tax evasion are excluded from consideration for waiver.
What is the difference between a waiver and a tax amnesty?
Tax waiver is provided for under the Tax Procedures Act section 89 (7) and Regulation 85 of the East African Community Customs Management Regulations(EACCMR) 2010 pertaining to waiver of Customs Warehouse Rent. An application can be lodged for waiver of penalty and interest upon full settlement of principal tax. Whereas the taxpayer is allowed to apply for waiver, there is no guarantee that the request will be granted.
A tax amnesty is periodic and targeted for a class of persons or activities with an aim of addressing a specific problem or achieving a specific objective e.g. bringing previously untaxed income into the tax bracket. The percentage of waiver of penalty and interest under tax amnesty is guaranteed, based on prescribed conditions that come with each tax amnesty opportunity.
How does an applicant qualify to apply for waiver?
All the principal taxes must be fully paid before an application can be lodged for consideration for waiver. The taxpayer has to be compliant in other taxes with regard to filing and payment of taxes. The applicant’s past compliance record is taken into account when processing the waiver application.
How does a taxpayer apply for waiver?
- For iTax assessments: Applications are lodged on iTax through the taxpayer’s profile.
- For pre-iTax assessments: Manual applications are to be presented to the taxpayer’s respective Tax Service Office (TSO).
All applications should state reason(s) why the taxpayer should be considered for waiver, giving evidence to support each of the reason(s).
What evidence should be attached to a waiver application?
Grant of waiver is dependent on mitigating grounds presented in the taxpayer’s application. The supporting evidence will therefore depend on the mitigating grounds presented in the application.
What is the treatment of erroneous penalty and interest in iTax arising out of a wrong obligation?
Applications for removal of erroneous penalty and interest are presented by the taxpayer to the Debt Office in the taxpayer’s respective TSO. The debt officer will examine the application as well as evidence provided and if, the application meets all the requirements, the officer will initiate the request for reversal of erroneous penalty and interest on iTax, in line with the procedure guidelines.
How does one follow up to know the fate of their application?
Applications can be followed up with the Debt Unit offices at the taxpayer’s respective TSO.
- For iTax waiver applications: Quoting the acknowledgement number.
- For manual applications: Using the stamped copy of the waiver application.
How does one know of the result of their application?
Taxpayers are notified by KRA of the decision once an application has been processed to conclusion.
- For iTax applications: An email sent is to the taxpayer’s registered email address as per KRA records.
- For pre-iTax assessments: A letter is sent to the taxpayer’s registered postal address as per the taxpayer’s contact information with the KRA records. A scanned copy of the decision is also sent to the taxpayer’s email address.
Where a waiver application is declined or granted partially, the taxpayer is required to make full payment of the amount that has not been waived. The notification issued by KRA will specify the amount due and the period within which to make payment.