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Kenya Revenue Authority (KRA) Taxes
mwania
#1 Posted : Saturday, September 02, 2017 8:43:03 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
I think one of the greatest risks for investors, business people is taxation. We should have a group for Tax discussions, issues and advice. Issues to do with tax audits, customs duty etc...

I have seen queries on customs duty especially from Chinese imports that seem to be on the spotlight by KRA customs offices.

Now for those intending to build, especially commercial buildings, note that KRA income tax officers are going round building sites and taking down approval numbers. With this, they then go to county planning offices and retrieve your PIN. With this they produce your tax returns and determine if you are compliant or not. If you do not file properly or do NIL returns, they summon you with printed bank statements (which they already have) and extort money from you! Beware
sparkly
#2 Posted : Sunday, September 03, 2017 3:10:01 PM
Rank: Elder


Joined: 9/23/2009
Posts: 8,006
Location: Enk are Nyirobi
mwania wrote:
I think one of the greatest risks for investors, business people is taxation. We should have a group for Tax discussions, issues and advice. Issues to do with tax audits, customs duty etc...

I have seen queries on customs duty especially from Chinese imports that seem to be on the spotlight by KRA customs offices.

Now for those intending to build, especially commercial buildings, note that KRA income tax officers are going round building sites and taking down approval numbers. With this, they then go to county planning offices and retrieve your PIN. With this they produce your tax returns and determine if you are compliant or not. If you do not file properly or do NIL returns, they summon you with printed bank statements (which they already have) and extort money from you! Beware


KRA does not extort. They collect taxes. If you do not agree on taxes payable, you simply get yourself a tax agent/ advocate object to KRA then appeal to the tax tribunal.
Life is short. Live passionately.
ForSport2
#3 Posted : Sunday, September 03, 2017 3:50:06 PM
Rank: New-farer


Joined: 12/9/2015
Posts: 47
Location: +254
"Extorting" implies they try to collect a bribe. Are you saying it does not happen?
mwania
#4 Posted : Sunday, September 03, 2017 8:53:56 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
That is why I have started this thread for us to discuss our experiences. And if you work for KRA, I am sure we all know that we are expected to pay taxes and that it is criminal not to pay taxes. But it is also good for us to discuss the issues pertaining to collection of taxes and the fact that some of these officers will knowingly overestimate the assessed taxes so as to ask for bribes. The fact that one can appeal for the revision of the taxes is a fact that the taxes assessed was overestimated in the first place. And the purpose of this is to extort money from tax payers.

I personally believe in complying and not bribing.
mwania
#5 Posted : Sunday, September 03, 2017 8:56:54 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
I also would like us to discuss the various known ways of tax evasion that are not wise to engage in for us at all. For example, why is that if you import goods from China, one pays for courier charges by weight and not by value where goods are ferried via Eldoret Airport and collected in Eastleigh? Is this not tax evasion? Isn't it a big risk to engage in it since IDF documents and proof of taxes paid is not available?
Lolest!
#6 Posted : Sunday, September 03, 2017 9:14:59 PM
Rank: Elder


Joined: 3/18/2011
Posts: 12,066
Location: Kianjokoma
mwania wrote:
I also would like us to discuss the various known ways of tax evasion that are not wise to engage in for us at all. For example, why is that if you import goods from China, one pays for courier charges by weight and not by value where goods are ferried via Eldoret Airport and collected in Eastleigh? Is this not tax evasion? Isn't it a big risk to engage in it since IDF documents and proof of taxes paid is not available?

Sounds like avoidance not evasion
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mwania
#7 Posted : Sunday, September 03, 2017 11:06:45 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
No. Tax avoidance is legal and fully auditable with supporting documents. That means that a tax investigator can randomly pick an item from your shop and with the serial numbers, get supporting import documents for it. The Eldoret route must be an illegal activity and therefore tax evasion. Somebody should clarify.
bennry
#8 Posted : Monday, September 04, 2017 9:15:15 AM
Rank: New-farer


Joined: 8/12/2016
Posts: 22
I am a Tax Agent. Compliance is always the best ways for persons to avoid Investigations by KRA officers. Ignorance, like when you pay a bribe yet you don't know what exactly you have not complied with is the the greatest problem with Kenyans. Like paying a bribe to get a TCC, yet the tax in arrears still remain in your ledger.
mwania
#9 Posted : Monday, September 04, 2017 12:26:54 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
Thank you Bennry. However, on the issue of imports from China through Eldoret to Eastleigh, what are your comments on this?
Gathige
#10 Posted : Monday, September 04, 2017 2:00:46 PM
Rank: Elder


Joined: 3/29/2011
Posts: 2,239
KRA sleuths galore,
"Things that matter most must never be at the mercy of things that matter least." Goethe
mwania
#11 Posted : Monday, September 04, 2017 2:23:02 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
Gathige. I am not a KRA sleuth and will never be. I believe that we should pay our legally spelt out taxes as law abiding citizens and that the Government should use our taxes prudently and with transparency and accountability. They should not create parallel panya routes that make it difficult for law-abiding business people to do business. If an item is charged 100% additional charges as taxes if cleared under IDF system and another just pays for shipping and handling only, how will the law abiding citizen compete effectively?

It is worth discussing it.
josimar
#12 Posted : Monday, September 04, 2017 3:00:37 PM
Rank: Member


Joined: 7/6/2010
Posts: 242

What happens in a scenario whereby You are employed and Your employer duly deducts and submits Your PAYE but You fail to file tax returns ...
mwania
#13 Posted : Monday, September 04, 2017 3:10:04 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
My take is that you will be penalized for not filing tax returns. Remember that KRA also wants to collect more taxes from you in case you have some side hustles like farming, shops and others where tax is not deducted at source. If they find that you have other undeclared income they will charge you penalties and interest for the unpaid extra tax. The employer will have done his part by deducting and remitting the tax to KRA and giving you your P9 form to file.
sparkly
#14 Posted : Monday, September 04, 2017 6:31:08 PM
Rank: Elder


Joined: 9/23/2009
Posts: 8,006
Location: Enk are Nyirobi
What some business don't seem to ubde stand is that tax is charged and collected per the law, starting with the Constitution to the Acts and Regulations. KRA officers have no power to collect taxes beyond what is provided for by the law.

Secondly, the law is fair to those who wish to comply because taxpayer can pay taxes through a plan and penalties & taxes can be forgiven.

Consequently, it makes sense for every taxpayer to get acquainted with basic tax requirements and mitigations.
Life is short. Live passionately.
urstill1
#15 Posted : Monday, September 04, 2017 7:35:23 PM
Rank: User


Joined: 9/6/2013
Posts: 1,446
Location: In a house
Why can't KRA give tax refunds to those who've complied? It is very discouraging to consistently file tax returns yet you never get refunds despite doing follow-ups upto the headquarters!!
mwania
#16 Posted : Monday, September 04, 2017 7:55:28 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
True. It is good for us to know that it is better to comply.
mwania
#17 Posted : Monday, September 04, 2017 7:58:10 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
Refunds are not automatic and they might require further assessment/ audit before ant refunds are made. In fact you might be forced to pay more taxes and penalties after they do due diligence and review your bank statements and those of companies where you are a director (using your KRA PIN they will easily establish this)
vky
#18 Posted : Monday, September 04, 2017 8:01:36 PM
Rank: Member


Joined: 6/17/2010
Posts: 571
mwania wrote:
I also would like us to discuss the various known ways of tax evasion that are not wise to engage in for us at all. For example, why is that if you import goods from China, one pays for courier charges by weight and not by value where goods are ferried via Eldoret Airport and collected in Eastleigh? Is this not tax evasion? Isn't it a big risk to engage in it since IDF documents and proof of taxes paid is not available?


What you are referring to is called cargo consolidation, very legal and approved by KRA
'One headache for famous medieval holy people was that someone might murder you to acquire your body parts for the relics trade'
mwania
#19 Posted : Monday, September 04, 2017 8:12:49 PM
Rank: Member


Joined: 10/29/2007
Posts: 76
I understand cargo consolidation but I doubt it is supported in any tax law. I understand that KRA tried to ask for details of clients of cargo consolidation companies where they latter refused. This was meant for KRA to start charging by value of goods.

In addition, the KRA guys go to the shops and ask the sellers of (especially serialized goods like electronics) to produce IDF documents. If you do not have, you will be charged with tax evasion. Check this fact out.
sparkly
#20 Posted : Monday, September 04, 2017 9:13:39 PM
Rank: Elder


Joined: 9/23/2009
Posts: 8,006
Location: Enk are Nyirobi
mwania wrote:
I understand cargo consolidation but I doubt it is supported in any tax law. I understand that KRA tried to ask for details of clients of cargo consolidation companies where they latter refused. This was meant for KRA to start charging by value of goods.

In addition, the KRA guys go to the shops and ask the sellers of (especially serialized goods like electronics) to produce IDF documents. If you do not have, you will be charged with tax evasion. Check this fact out.


There are 6 methods of valuation of goods for customs under the 4th Schedule to the East African Customs Management Act.

Traders consolidate cargo to take advantage of the minimum duty per container which I belief is around USD 20,000

Life is short. Live passionately.
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