Sometime back, a friend of mine approached me with some tax issues. He was complaining about some imposed tax penalties for late filing. After listening to his story, I realized that he had no clue about the Kenya Revenue Authority penalty waiver program. In this article, I will dive deeper and explain different dilemmas surrounding the penalty waiver. 

On a few occasions, taxpayers for one reason or the other find themselves in situations where they are not in a position to comply with the strict tax filing deadlines. When this happens, taxpayers get penalized by the Kenya Revenue Authority for either filing late or not filing at all. These penalties continue to accumulate interest over time until payments for them are made.

Late or non-filing could be due to circumstances beyond taxpayers' control. In such instances, a taxpayer can apply to have these penalties and interests waived. This is done through an application to the commissioner. However, all applications regarding waivers should be well filled with all supporting documents and evidence justified.

waiver application

Kenya Revenue Authority Waiver application is an application letter addressed to the commissioner by the taxpayer with detailed reasons why the affected party, here referred to as the taxpayer, needs the penalties imposed either for late filing or non-filing of returns to be uplifted or done away with. Waiver of penalty is provided in the Tax Procedures Act 2015, section 89(7).  However, the section specifies the following conditions:

• The application must be justified with supporting documents and evidence.
• The principal tax must have been paid
• That the taxpayer has been tax compliant on all other taxes

Once the waiver is received, KRA starts processing the tax waiver immediately. In this process, thorough scrutiny of all applications is done to confirm the justification of reasons, and proper required documents are attached in support of each raised reason.

KRA assigns a reference number to all pending waiver applications for tracking and escalation purposes. At this stage, applicants may be called upon to provide more supporting documents to aid their case. This is usually done via email notifications to the respective applicants. Once the notification is received the taxpayer will be allowed 30 days to respond accordingly. It’s crucial to note that waiver supporting evidence also has some strict deadlines and KRA doesn't accept late evidence. If your waiver application is rejected on such grounds, then KRA will demand all accrued penalties and interest from you as a taxpayer.

Waiver application Evidence

One may ask what kind of evidence should be provided during the application. This depends solely on the tax head. Some of the possible viable reasons include cash flow constraints, errors in input invoice declarations, especially in VAT Auto Assessments (VAA), etc.

The waiver application process is one of the initiatives KRA has put in place to ensure qualified taxpayers are successfully granted. File and pay your taxes on time to avoid penalties.