KRA breaks up unified tax filings


KRA office located at Times Towers in Nairobi
File photo of KRA headquarters located at Times Towers in Nairobi. PHOTO| COURTESY

In Summary

  • The Kenya Revenue Authority (KRA) has withdrawn a letter that exempted taxpayers from provisions of section 15 (7) of the Income Tax Act.
  • The waiver of the February 1979 letter which had anchoring in section 64 (1) of the Tax Procedures Act sees the reinstatement of separate tax filing provisions.
  • All taxpayers will from next month prepare a separate account in respect of each specified source of income.

Taxpayers will no longer compile tax filings on differentiated sources of income from October 1, 2021.

This follows a move by the Kenya Revenue Authority (KRA) to withdraw a letter that exempted taxpayers from provisions of section 15 (7) of the Income Tax Act.

The waiver of the February 1979 letter which had anchoring in section 64 (1) of the Tax Procedures Act sees the reinstatement of separate tax filing provisions.

For instance, all taxpayers will from next month prepare a separate account in respect of each specified source of income.

Meanwhile, reported losses will only be deductible from gains or profits booked in the same line of income in subsequent years of income.

The Income Tax Act breaks down specific lines of income into six parts to include rights granted to other persons for the use or occupation of immovable properties.

Others are the employment of personal services for wages, surplus funds withdrawn by or refunded to an employer in respect to pensions and provident funds and other sources of income chargeable to tax.

The Commissioner of Domestic Taxes is allowed under law to withdraw a public ruling through the issuance of notice.

The separation of tax filings for specific lines of income is expected to widely lead to increased compliance procedures as some taxpayers will now be required to have multiple tax files for each source of income.

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