Imagine being in a situation where you are laden with several debts and wondering how you will get the money to sort it out. Part of the debt obligation, is tax liabilities that you owe Kenya Revenue Authority due to penalties and interest that have accumulated for not filing returns and making payments on time. When you remember your bank account, it paints a bleak picture. In that pensive state, you then come across information on Voluntary Tax Disclosure Programme (VTDP) and right there, some hope dawns on you.

Voluntary Tax Disclosure Programme is a where a taxpayer confidentially discloses tax liabilities that were previously undisclosed to the Commissioner for the purpose of being granted relief of penalties and interest of the tax disclosed. The disclosures eligible for this programme are from 1st July 2015, to 30th June 2020. Five years of penalties and interest being waived is a huge relief to anyone in a debt. It gets better since one is given 100% waiver on penalties and interest if the disclosure is made during the first year of the programme and tax liability paid within the same year. However, one gets a waiver of 50% if the disclosure is made and tax liability paid in the second year of the programme, and 25% if it is done in the final year of the programme.

There is more to celebrate about VTDP since you cannot be prosecuted for the previous tax liabilities you have disclosed, if you are granted relief. However, where one fails to disclose the facts of the tax liability, the Commissioner may withdraw the relief and assess additional tax. It is therefore, important to declare the whole truth because as the saying goes, the truth shall set you free. For more details on conditions attached to VTDP, click  here .

How does one apply for VTDP? The application can be done online via iTax in a prescribed return for the specific tax head under disclosure. When submission is complete, the person shall receive an acknowledgement slip. A person may submit a manual application to their respective Tax Service Office before the roll out of the module in iTax or in the event of a temporary system down time. A person submitting a manual application shall provide tax return(s) for the period(s) and the application form must include all the required details. The VTDP application form can be downloaded here.

Are you required to make any payment once the VDP is granted? Yes, for VTDP, the relief is given on penalties and interest, but one is required to pay the principle tax. Where it is not possible to make a one-off payment, a payment plan is agreed upon with the Commissioner and the payments are made within one year. 

Once full payment is done, the taxpayer is issued with a certificate to acknowledge payments of taxes within the specified VTDP period. VTDP is a programme that will not only benefit taxpayers but also improve revenue collection through enhanced compliance. The initiative aims at bringing more taxpayers into the tax net.

Margaret Gachina