Filing a nil return? You may have to rethink it.
With the tax filing season here with us, many people tend to complain of either the taxes being too high or just being too much. When it comes to 2018 tax returns, KRA reported that there were over 3.6 million people who filed which was 400,000 more than had filed the previous year. This number includes individuals who filed nil returns.
It is the duty of every Kenyan who makes an income either through employment, business in selling of goods or services rendered, to pay their rightful share of taxes. It may not seem like it, but paying taxes is important for the facilitation of public services to you and others within the Kenyan borders.
We would like to shed some light on the filing of nil returns, which means that the individual filing did not make any income within the tax year (in this case, January to December of 2019). It is important to note that having low income does not mean that your income is nil. Further, having a tax exemption certificate does not mean that one should file a nil return. It is fundamental to note that a nil return should only be filed if an individual has not received ANY income within the period.
In certain aspects the government does have bilateral agreements with some international organisations where the organisation is exempt from tax and the general assumption is that employees that are Kenyan citizens working in these organisations are also exempt from tax. This is not the case. Unless one has specifically been exempted from paying tax then individuals should file annual returns and pay any tax liability due.
It is important to note that it is an offence in law to file a nil return when in essesnce you did earn an income. The Tax Procedures Act provides that it is an offence for a taxpayer to:
a) Omit from their return an amount which should have been included
b) Make any incorrect statement which affects his or her liability to tax
c) Deliberately default on any obligation imposed under a tax law
If an individual is found guilty of any of the above offences, he/ she is liable to a fine not exceeding KShs 10M or double the tax evaded, whichever is higher. Also one could be sent to jail for a term not exceeding 10 years.
Taxpayers should therefore be careful while filing nil returns lest you are found guilty of fraud and/ or tax evasion.
If you have any questions or concerns, please do not hesitate to be in touch with your direct contact at Andersen Tax. We are determined to weather the storm together.
Thank you for your collaboration and trust.
Andersen Tax Kenya.
7th Floor Rhapta Heights Rhapta Road P.O. BOX 76491-00508 Nairobi, Kenya