Why It Benefits You Benefit to File Your Tax Returns
Tax Returns: Why It Benefits You to File Your Returns
Whether you are earning an income above the threshold the government taxes or not, filling your tax returns is mandatory in Kenya. Majority of people are, however, still not filling their annual income tax, even after the taxman introduced hefty fines for those who fail to do so.
Beginning January 1st each year to June 30th, KRA opens its tax returns portals and invest heavily in civic education and advertisement to remind everyone to file their returns. Although some people do so, and some blatantly ignore it, the majority of people do not understand what advantage it will bring them. Today, we want to clear the air and tell you why filling your returns is not only important to the government but also to you.
To Avoid Fines and Penalties
Let’s start with what you already know. Failing to file your tax returns will attract 20,000 shillings fine for every year you do not file. In the eyes of Kenyan’s filing returns is probably still new as KRA has only been insistent on it for the past few years. What you may not be aware is that before 2016, the fine for not filling your return stood at 1,000 shillings, which left loopholes for the taxman to lose money. Thus, the more than twenty times raise in fines.
What are some of the penalties and fines you may attract besides failing to file returns? If you file your returns late, or file returns and fail to pay the tax you filed for, you will face 10,000 shillings fine. You may also be fined between 10,000-200,000 shillings for not keeping proper tax records. Fraudulent accounts will pay fines not exceeding 400,00 shillings while enforced registration will pay a default penalty of 100,000 shillings. You will be eligible for fines if you provide false statements, hinder or obstruct KRA authorized officers, fail to display the certificate of registration and if you do not comply with VAT regulations. This may even send you to jail for a period not exceeding three years.
You May Be Eligible for a Tax Refund
Majority of Kenyans pay their income tax through payroll withholding. However, your payroll withholding may not always be accurate and you may either be underpaying or overpaying your taxes. If you are eligible for a tax refund, you will be required to make a claim with KRA and have the refund credited to your bank. On the flip side, you may need to pay additional taxes if you were underpaying your income taxes, or if you have additional income you should declare that does not appear on your payroll.
To Get A Tax Clearance Certificate
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Are you applying for a government tender? Or a government Job? You must attach a tax compliance certificate when applying for everything government, from jobs to tenders. You may need to attach your KRA pin which will then be used to check if you are tax compliant or not. To be in good standing with the taxman is therefore to your advantage lest you miss out on opportunities when you fail to get a tax compliance certificate.
You can file your returns on the iTax portal, which will only take you a few minutes to complete. If you do not know how to file your returns, CLICK HERE for a step by step guide on what to do. You may also contact a finance company and accounting company such as our to have them file the returns for you.