As Ronalds LLP, we encourage taxpayers who have undisclosed tax liabilities and have not been audited by KRA to seize this opportunity to avoid paying hefty penalties and suffer tax audits by KRA for non-disclosure of taxes in the future.
In order to take advantage of the Voluntary Tax Disclosure Program, we recommend the following steps:
- Engage a tax consultant to review the companies tax exposure through the tax health check process
- There is a need to discuss within the management the various tax implication resulting from the tax exposure.
- While at the management level, we advise on the existing tax planning opportunities available to the taxpayer aside from the timely VTDP.
- Upon making decision to voluntarily disclose the tax liability, of the company or individuals, we initiate the application process for VTDP through the availed channels by the Commissioner.
- There is need to discuss within the management on the various tax implication resulting from the tax exposure.
- While at the management level, we advise on the existing tax planning opportunities available to the taxpayer aside from the timely VTDP.
- Upon making the decision to voluntarily disclose the tax liability, of the company or individuals, we initiate the application process for VTDP through the availed channels by the Commissioner.
Why enroll for Voluntary Tax Disclosure Programme?
If the application is accepted, the taxpayer shall be granted a remission of the interest and penalty due on the tax liability as follows
- 100% remission where the disclosure is made and tax liability paid in the first year (2021) of the programme
- 50% remission where the disclosure is made and tax liability paid in the second year (2022) of the programme
- 25% remission where the disclosure is made and tax liability paid in the final year (2023) of the programme.
Who does not qualify for Voluntary Tax Disclosure Programme?
A taxpayer will not be eligible for VTDP where the taxpayer: –
- If under audit or investigation for the undisclosed tax, or has been served with a notice of intention to investigate or carry out an audit/compliance check for the undisclosed tax.
- If is a party to an ongoing litigation in respect to the tax liability or any matter relating to the tax liability
- VTDP only applies to a disclosure resulting in payment of taxes. The person shall not be granted relief which may result into a refund of taxes paid on or before the VTDP window or which may lead to an increase in their tax credit or loss carried forward.
- If one fails to reveal all the material facts during the VTDP then the commissioner reserves the right to revoke the process. This is in the spirit of the maxims of equity which states he who comes into equity must come with clean hands.