1. Tax Procedures Act, 2015: Amendments and Implications
Annual Tax Seminar, Coast Branch, 2016
Tax Procedures Act, 2015: Amendments and Implications
Presenter: Jemimah Mugo
Tax Director, Eastern Africa
Deutsche Post DHL

2. Introduction
The Tax Procedure Act, 2015 came into operation on 19 January 2016.
The objective of the Act is to provide uniform procedures , in all matters of domestic taxes, for;-
Consistency and efficiency in the administration of tax laws;
Facilitation of tax compliance by taxpayers; and
Effective and efficient collections of tax.
There are various amendments under the Income Tax Act and Value Added Tax Act, 2013.
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3. Administration of tax laws
The Commissioner shall be responsible for;-
Control and collection of taxes
Accounting for collected taxes; and
General administration of taxes, subject to direction and control of the Cabinet Secretary
The Commission is, however, empowered to delegate to any other authorized officer in writing.
Authorized officers shall in the performance of their duties have powers, rights, privileges and protection of a police officer.
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4. Tax Payers Registration
Registration within 30 days
Deregistration to be done within 30days
Commissioner to respond within 14 days denying de- registration
If Commissioner fails to respond deregistration effective after 6 months
Who is required to register?
A person who has accrued or expects to accrue a tax liability
Expects to manufacture or supply excisable goods
Expects to supply excisable services
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5. Notification of changes by taxpayer
Should be done within 30 days
Place of business, change of trading name, registered address
Shareholders with more than 10% or more of the issued share capital
Nominee ownerships to disclose the beneficial owner
Trustees beneficiaries
Cessation or sale of business

6. Taxpayer’s tax representative
Persons who can act as tax representatives, among them;
A legal representative of an Individual under legal disability;
Chief Executive Officers, Managing directors, Company secretary, treasurer, trustee or a resident director or similar officer acting in such a capacity;
Accounting officers in regard to the National government, county government, the Judiciary and the Parliamentary Service Commission;
A partner or a manager of a partnership in the case of a partnership
A tax representative shall be responsible for:
performing any duty or obligations of the tax payer as required under the Act
including filing of returns; and
shall be held personally liable for payment of any tax due
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7. Appointed persons
Administrators, personal representatives, trustees in bankruptcy, receivers or liquidators to notify Commissioner of appointment within 15 days of appointment
Commissioner to respond within 2 months on any tax liability of tax payer

8. Licensing of Tax Agents
An individual or a partnership may apply to the Commissioner for a License as a tax agent at a prescribed fee;
The Commissioner shall issue the License to the applicant if he/she believes that the applicant is fit to act as such.
The Commissioner is also empowered to cancel the license if he/she believes otherwise;
A person who is not licensed as a tax agent is not permitted to offer assistance to another person for a reward unless he/she is a legal practitioner acting in the ordinary course if business;
A tax agent who ceases to carry out business as a tax agent is required to notify the Commissioner at least 7 days before;
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9. Record keeping A person is required to;
Maintain any document required under tax law in either of the official languages (English and Kiswahili);
The documents maintained should enable the person ‘s tax liability to be readily ascertained;
Retain documents for a period of five years
The prescribed units of currency in the books of accounts, records, paper registers, tax returns or tax invoices is Kenya shillings
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10. Tax Returns
Extension of time submit the tax return before the date of submission of the tax return introduced;
The extension granted shall not alter the tax due date;
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11. Tax Assessments The identifies the following forms of assessments;
Self Assessment - A return completed and submitted electronically shall be treated as a self assessment return despite the pre-entered information and the tax payable being computed electronically;
Default assessment – an assessment issued by the Commissioner in cases where a tax payer has failed to submit a tax return;
Advance assessment – an assessment issued by the Commissioner in instances where the taxpayer is yet to submit a return prior to the filing due date.
Open tax assessments by the KRA - 5 years
Relief for mistake or error in self-assessment
Available within 5 years and
Commissioner is required to respond within 30 days.
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12. Collection, recovery and refund of tax
Electronic payments unless there is written authority by the Commissioner;
Extension of time to pay a tax due under a tax law;
Interest on late payment 1%; simple interest;
Interest shall not accrue between the date of notification and the date of payment if payment is made as per notification;
Commissioner may require the tax payer to provide a security.
The Commissioner may write directly to the Land registrar of land and buildings on property owned by the tax payer
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13. Collection, recovery and refund of tax ....cont
Transferee shall be liable for tax in case of transfer of business assets & liabilities;
The tax also to be recovered from the transferor;
Overpaid tax
Claim of refund to be made within one year of payment of the tax (extended to 5 years – effective 1st January 2017)
Issues worth noting under the measure introduced;
The application of waiver on interest excluded, then re-introduced – 1st January 2017
KRA to pursue transferor and transferee in case of transferred liability;
Extension of time to pay a tax; interest accrues on the original due date.
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14. Tax decisions, objections and appeals
Objection/ notice of objection to be made within 30 days of being notified of the decision.
Objection only valid, if
Precisely state the grounds of objection;
The taxpayer has paid the entire amount of the tax not in dispute.
Commissioner to respond within 60 days
A taxpayer to apply for extension of time to lodge a notice of objection.
All appeal to the Tribunal will be in line with the Tax Appeal Tribunal Act.
Out of Tribunal/ court settlements to be done within 90 days
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15. Rulings A public ruling will be binding on the Commissioner.
The public ruling shall be published in at least two newspapers with nationwide circulation.
The public ruling is not binding on the taxpayer.
A taxpayer may apply for a private ruling to the Commissioner in writing.
The Commissioner should revert back to the applicant within 45 days.
A private ruling shall not be binding on a taxpayer.
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16. Communication forms and notices
A provision for the application a Tax compliance Certificate
Use of information technology to submit Returns, notice, application, statement, tax returns to the CIT.
Notices can now be served electronically.
If the due date falls on a Saturday, Sunday, or public holiday in Kenya, the due date shall be the previous working day.
However, if a person submits a tax return in electronic form and pays the tax electronically, the due date remains the date specified in the relevant tax law.
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17. Penalties and offences
Previous legal provisions
Tax Procedure Act, 2015
Registration or de-registration
VAT- KES 200,000 or imprisonment for a term not exceeding 2 years or both
Excise License – KES 500,000
Income Tax – no specific tax
KES 100,000 per month or part thereof subject to a max of KES 1M
Maintenance of proper records
No specific penalty apart for the general penalties
10% of the amount of tax payable subject to a min of KES 100,000
Late submission of employment related returns & Turn over tax
KES 10,000 per quarter
25% of the tax due or KES 10,000 whichever is higher
Turn over tax – KES 5,000
Late filing of any other tax return
Corporates – 5% of the tax due subject to a min of KES 20,000
Individual – 5% of tax due subject to a max KES 1,000
5% of the tax due subject to a min of KES 20,000 for both individual and corporates
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18. Penalties and offences…….Cont
Previous legal provision
Tax Procedure Act, 2015 provision
Failure to file other documents required under the tax law besides the return
No specific penalty apart from the general penalty
KES 1,000 per day subject to a max penalty of KES 50,000
Online filing of return and payment of tax electronically
KES 100,000 if the tax payer fails to respond to the Commissioner within 14 days of the notice
Tax shortfall attributable to deliberate provision of false or misleading statement or omission
VAT- KES 1M or imprisonment of 3 years or both
Income tax – 200% of the tax amount involved
75% on tax shortfall attributable to fraudulent tax filing
20% applicable on tax shortfall not attributable to fraud
Penalty on tax shortfall increased by up to 25% for repeat offenders (i.e. 3rd or subsequent time) and by 10% for offenders committing the crime for the 2nd time
Penalty reduced by 10% when a person discloses tax shortfall voluntarily to the KRA
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19. Penalties and offences…….Cont
Previous legal provision
Tax Procedure Act, 2015 provision
Tax Avoidance
No specific penalty.
The Commissioner, however, can reverse a transaction that he/she believes to constitute a tax avoidance scheme and impose penalties under various tax laws
200% of the amount avoided by a taxpayer.
This penalty cannot be waived by either the Commissioner or the Cabinet Secretary
Fraudulent claim of tax refund
VAT-200% of the amount of the claim
200% of the amount of claim under all tax laws
Fraudulent act of omission or commission in relation to a tax period
VAT – A general penalty not exceeding KES 1.5 M or <=3 yrs or both
Income tax – Fine <=KES 10,000 or 200% of the tax involved whichever is higher or Imprisonment of a term <=2yrs or both
Fine <=10M or 200% of the amount evaded to imprisonment of a term <=10 yrs or to both
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20. Penalties and offences…….Cont
Previous legal provisions
Tax Procedure Act, 2015 provision
Tax agents related offences e.g. acting as agents illegally
VAT – General penalty of a fine <=KES 1M or imprisonment for a term <=3 years or both
Income Tax – Fine <= KES 0.25M with respect to each return, statement, or other document subject to additional tax.
Fine equal to 200% of the amount of tax evaded or a fine of KES 5 million whichever is higher or to imprisonment for a term not <=5 years, or to both
Failure to appear before the Commissioner when required to do so for committing an offense under tax law
No specific penalty
KES 10,000 in case of an individual
KES 100,000 for any other case
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21. Remission of penalty
A person liable to penalty may apply in writing to the Commissioner for remission of the penalty;
The application must include reasons for remission;
The Commissioner may remit the whole or in part the penalty payable with approval from the Cabinet Secretary
The Commissioner is required to maintain a public record of each remission together with reasons for the remission;
Record of remissions shall be reported to the Auditor-General once in every 3 months
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22. Miscellaneous provisions
Respective amendments to the Income Tax Act, Value Added Tax Act and Kenya Revenue Act.
Any appeal or prosecution commenced before the commencement date may be continued and disposed of as if this Act had not come into force.
Tax liability arising before commencement of this Act may be recovered under this Act
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23. Amendments under the Finance Act, 2016
Waiver of interest re-introduced
Interest on erroneous refund of tax (1%)
Tax overpayment
the Commissioner to respond to taxpayers’ applications for refund within 90 days of receiving the application.
refund (2 years), failure to which interest of 1% is applicable
Commissioner to respond to the following applications within the stipulated timelines;
Extension of time to pay tax – 30 days
Notification by an agent of inability to pay tax – 30 days
Third party returns
Appointment of tax representatives by non-residents
Registration of tax agents – upon recommendation by Tax Agents Committee
Tax amnesty on investment income earned outside Kenya

24. Questions/ Comments

25. THE END!