EXPLAINED: Difference Between Tax Amnesty, Waivers And Write Offs

There are government programs that provide financial relief to tax evaders, through such schemes, the government can decide to waive off all or part of the financial penalties imposed on its citizens based on certain conditions.

In some cases, the government could allow taxpayers to pay back the full amount of money accrued in penalties in easy installments over a longer time frame or the government can as well decide to issue a relief to the tax defaulter by making them partially pay the defaulted amount.

Despite the existence of such policies by the government, most people often confuse these measures with either tax amnesty, waivers, or even tax write-offs.

KRA Commissioner for Domestic Taxes Rispah Simiyu speaking during a meeting at Ole Sereni Hotel, Nairobi on October 24, 2023.



Tax Amnesty

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

Tax amnesty is simply a limited-time offer by the government to a taxpayer to pay a defined amount, in exchange for forgiveness of a tax interest and penalties relating to a previous tax period(s), as well as freedom from legal prosecution.

The amnesty applies to a person with penalties and interest but has no principal taxes owing for periods up to December 31, 2022. However, for those with principal taxes from January 1, 2023, onwards, the outstanding principal tax debt should be paid by 30th June 2024.

The tax amnesty commences on September 1, 2023, and shall remain in force until June 30, 2024. By accepting the terms and conditions of the amnesty, the taxpayer commits to honouring the payment plan agreement.

Kenya Revenue Authority building at Times Towers


Tax Waiver 

A tax waiver is when penalties imposed either for late filing or non-filing of returns are lifted or done away with completely by the revenue authority. Unlike tax amnesty, the waiver is not time-bound and can be done anytime upon application by the taxpayer. 

To get a waiver, the taxpayer needs to make an application letter to the commissioner detailing reasons they need the penalties imposed either for late filing or non-filing of returns to be uplifted or done away with. 

For a tax waiver to be granted, the application must be justified with supporting evidence from documents, and the principal tax must have also been paid. The taxpayer must have also been tax-compliant on all other taxes.

Tax write-offs

This is a legitimate expense that can be claimed as a deduction and lower your taxable income. A tax write-off is also referred to as a tax deduction.

The best benefit from a tax off is the reduction of your taxable income, which in turn lowers the taxes you have to pay. 

The Finance Act, of 2023 did away with sections of the same Act which provided for the write-off of taxes and tax waivers.

Therefore, KRA did away with the application, processing, or granting of waivers or write-offs on interest, penalties, and fines.

President William Ruto speaking during the 2023 Taxpayers Day in Mombasa County on November 3, 2023.



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