Introduction

The Finance Act 2023 introduced a tax amnesty for interest and penalties on tax debt by inserting Section 37E to the Tax Procedures Act, 2015. The amnesty is applicable to:

• A person with penalties and interest but has no principal taxes owing for periods up to 31^st December 2022; and
• A person who has principal tax accrued up to 31^st December 2022 but pays the outstanding principal tax debt by 30^th June 2024.

The Finance Act, 2023 also deleted the tax waiver and abandonment provisions hence taxpayers are encouraged to take advantage of the tax amnesty.

Purpose

These guidelines are issued to taxpayers to guide on the implementation of the tax amnesty.

Eligibility

All taxpayers who do not have principal tax due for periods up to 31^st December 2022 but have penalties and interest due shall qualify for the tax amnesty. The amnesty under this category shall be automatic and taxpayers will not be required to apply.

All taxpayers who have outstanding principal tax for periods up to 31^st December 2022 but fully settle the outstanding principal tax debts by 30^th June 2024, shall qualify as explained below;

1. The taxpayer with outstanding principal tax debts applies for the amnesty.
2. The application for the amnesty be accompanied by a payment plan proposal for the outstanding principal taxes.
   • All taxpayers with self-assessments or amended assessments relating to any period up to 31^st December 2022 but raised after 31^st December 2022 shall qualify, as long as the outstanding principal taxes raised in the assessments are paid before 30^th June 2024.
   • All taxpayers with tax liabilities that are under any dispute process will qualify for the amnesty as long as they meet the conditions of the amnesty.

Exclusion from Tax Amnesty

• Interest and penalties imposed under Section 85 (tax avoidance) of the Tax Procedures Act, 2015, shall not qualify for the amnesty.
• All penalties and interest relating to tax debts accrued for the periods after 31^st December 2022, shall not qualify for the amnesty.

Effective Date

The tax amnesty commences on 1^st September 2023 and shall remain in force until 30th June 2024.

Basis of processing the Amnesty

The tax amnesty shall be processed on the basis of the tax period and tax obligation.

Tax Liabilities covered

The tax amnesty shall cover all tax heads under tax laws covered in the Tax Procedures Act, 2015.

General Conditions for Remission of penalties and interest

A person qualifies for remission of interest and penalties under the following conditions:

• Only interest and penalties that relate to principal tax due for the periods up to 31^st December 2022 shall be granted amnesty upon full payment of the principal tax on or before 30^th June 2024. Where principal tax relating to periods before 31^st December 2022 is not paid by a person by the end of the amnesty period, any penalty and interest on the unpaid tax shall not qualify for amnesty.
• Taxpayers with tax liabilities for periods prior to 31^st December 2022 under return amendment, reconciliation or with other pending system issues, must first liaise with their respective TSOs to conclude the process. They shall then pay the outstanding principal taxes before the amnesty is granted.
• Taxpayers with tax liabilities for periods up to 31^st December 2022 which are under a dispute process may engage the Commissioner for the settlement of the disputes and agree on a payment plan for the agreed amounts.

Application for Tax Amnesty

• A taxpayer who qualifies for amnesty under paragraph 3 shall apply for the amnesty in the system.
• The system shall display the taxpayer’s debt status with all tax heads. The taxpayer will be required to apply for the amnesty by selecting the periods and tax heads which qualify for the amnesty.
• The taxpayer may make full payment of the principal tax due or enter into a payment plan agreement with the Commissioner.
• The taxpayer who opts to settle the outstanding principal tax in installments shall indicate the frequency of payments in the system embedded payment plan agreement.
• The payment plan agreement shall not extend beyond 30^th June 2024. Any penalties and interest relating to the principal tax under the tax amnesty period that remains unpaid after 30^th June 2024 shall not qualify for amnesty.
• By accepting the terms and conditions of the amnesty, the taxpayer commits to honoring the payment plan agreement.
• Amnesty shall be granted upon the payment of the final instalment as committed in the payment plan agreement.
• A detailed user guide on the Amnesty application process will be available on the KRA website, where all the Taxpayers shall be directed for comprehensive amnesty application details.

Treatment of Balance of Tax and Monthly Taxes

• The Law allows for payment of balance of tax by 30^th April 2023 for a person whose year-end is December 2022. Therefore, interest and penalties in relation to principal tax due for the year ended 31^st December 2022 are eligible for the amnesty.
• Tax point for monthly taxes for December 2022 period falls on any day in the month of December 2022. The law however allows payment to be deferred up to the subsequent month on specified due dates. Therefore, interest and penalties in relation to principal taxes due for the Month of December 2022 are eligible for amnesty.

Disclaimer

Taxpayers are hereby notified that if there is any inconsistency between the provision of the Revenue Laws and the information contained herein, then the Revenue Laws shall prevail.