The most anxiously awaited date in Kenya second to the national political elections day on 8th of August 2017 was June 30th 2017, the final day of submitting the annual tax returns for the year of income 2016.
The lessons
The day is past. However, there are lessons that we learnt from the whole experience. The following are 10 lessons (among the many) that we learnt and what to do so that we do not experience stress during any other period when filing annual tax returns.
a) Every June 30th
In every year, June 30th is the final annual tax returns submission day for the previous year of income for all individual taxpayers and December cases in Kenya. Therefore, every year, the annual tax returns for the previous year of income must be submitted on or by the 30th day of June. This will be a yearly ritual so to speak.
As a taxpayer’s in case this is the date by which you must submit the annual tax returns, prepare for the date throughout the year of income by making sure that you have all tax information required to file the tax returns.
b) Not to wait till June 30th
Many taxpayers regretted waiting till 30th June to submit the tax returns especially because of the stress that they underwent.
Submission of annual tax returns is not done only done on the 31st of June. KRA opens the system for annual tax filing way before this date. Therefore, taxpayers should not wait until the last minute when everyone is rushing to file the tax returns. Submit the annual tax returns immediately the system is opened. KRA always reminds the taxpayers about the commencement of annual tax returns filing.
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c) i-tax is not always accessible
I-tax is a system that is man-made. And like all man-made systems, it is bound to fail when you most need it. When the system fails then it is not accessible. The system fails because of such things as congestion when many taxpayers are logged in using it. The system is electric power based and anytime when there is no electric power, the system is not accessible.
With this realization, the taxpayer must ensure that they submit the annual tax returns early so that they do not rush as June 31st approaches. In case the taxpayer does not access the I-tax platform, they should keep trying.
d) How to complete tax returns
As a taxpayer, you were required to complete the annual tax return. Some taxpayers were completing the tax returns for the first time. They found it difficult to complete the tax forms.
The lesson learnt is that it is always helpful to learn how to complete the tax return forms before embarking on completing the actual form.
e) Information on previous year’s income
In the tax return forms, there were sections about annual income during the year of income. There were various sections to list various sources of income. The various sources were employment, business, rental, farming, investments etc. Many taxpayers could not remember the sources of their income during the 2016 year of income.
Therefore, before completing the annual tax returns, every taxpayer needed to know the sources of their income. It is helpful for a taxpayer to continuously record every income and the sources of the income during any year of income.
f) Information on previous year’s expenses
Tax payable in in a certain year is arrived at after deducting all deductible expenses from the annual income. Many taxpayers found that they did not have information about the expenses that they had incurred when generating the income.
Hence, it will benefit every taxpayer to record and maintain all the information about the expenses that they incur in generating income on a daily basis for the year of income.
g) Tax to pay
After completing the annual tax returns, some taxpayers found that there was a tax to pay. Therefore, they needed cash at hand to make the tax payment otherwise there would be fines, penalties and interests.
It would be beneficial for taxpayers to establish their tax status before completing the annual tax returns. This way, they will be able to pay the taxes beforehand.
h) Need for expert advice
May taxpayers found that they needed to consult tax experts before completing the annual tax returns. The taxpayers needed clarification of several things. Some taxpayers hired tax experts to advise them on the annual tax forms and the submission of the same.
Tax experts such as tax consultants, tax auditors, tax lawyers etc. help taxpayers comply with tax law. Therefore, taxpayers should seek their services throughout the year of income not only at the time of filing the annual tax returns. This is because the details put in the annual tax returns are a summary of a whole year’s working. The tax experts should be involved throughout the year of income.
i) Penalties and interests for unpaid taxes
When completing the annual tax returns, some taxpayers found that they had unpaid tax liabilities which they were not even aware of. Any unpaid taxes that the taxpayers had not paid attract penalties and interests in addition to the principal tax.
Every taxpayer must ensure that they have paid 100 % of their taxes by the close of the year of income. Any variance of more than 10 % attracts penalties and interests. Taxpayers should be aware of the requirements of paying tax on an instalment basis or they voluntarily pay the tax.
j) Fine for non-filing of 2016 annual tax returns
For many years there has always been a fine for non-filing of annual tax returns for the individual and corporate taxpayer. In 2017, KRA put it in the media that failure to submit tax returns by the due date will attract Kshs 20,000. This was a departure from the previous year’s fine for non-filing annual tax returns which was substantially low.
Taxpayers should be aware of the fine for non-filing the annual tax returns. The fine is not a business expense to be deducted from the annual income. Hence, the annual tax returns must be filed before the due date to avoid this fine.
These are some of the lessons that we learnt about the filing annual tax returns. Lessons are learnt and corrective measure should be made. We hope that we will continue preparing to file 2017 annual tax returns before 30th June 2018.
Thank you for reading the article.
Dr. Wakaguyu Wa Kiburi.
