Taxes can be complex and daunting, especially when it comes to ensuring compliance. In Kenya, the Kenya Revenue Authority (KRA) introduced a crucial document known as the Tax Compliance Certificate (TCC). This certificate serves as evidence that an individual or business has met its tax obligations. In this blog, we will talk about the intricacies of the Tax Compliance Certificate, how to apply for it, its validity, and the consequences of non-compliance. Whether you're applying for a job, seeking a government tender, or running a business, understanding the TCC is essential.
Tax Compliance Certificate
What is a Tax Compliance Certificate?
A TCC, otherwise known as a Tax Clearance Certificate, is an official document issued by the Kenya Revenue Authority (KRA), as proof of having filed and paid all your taxes.
KRA issues Tax Compliance Certificates because it is a requirement when among others:
- Applying for a job. For jobs, however, a TCC is required upon being offered the job.
- Applying for a government tender.
- Applying for renewal of Work Permit.
- Applying for clearing and forwarding agent license.
- Seeking license to operate a Liquor Store.
- One wants to confirm their compliance status.
How long is the Tax Compliance Certificate Valid?
Tax Compliance Certificates are valid for twelve months only. Application for a TCC is done through the iTax platform and the certificate is sent to applicants' email addresses. You can now check if your Tax Compliance Certificate is valid using the KRA M-Service App.
Requirements for Applying for a Compliance Certificate
Taxpayers seeking Tax Compliance Certificate must be compliant in:
- Filing of tax returns on or before the due date for all applicable tax obligations.
- Payment of tax on or before the due date.
- Clearance of all outstanding tax debt.
How to Apply for a Tax Compliance Certificate
Would you like to get a Tax Compliance Certificate? Visit iTax to make the application.
Tax Offenses & Penalties
Tax offenses can attract punitive penalties and interest.
These include:
Tax Compliance Offences and Their Penalties
Offense | Penalty |
|---|---|
| Late filing of Pay-as-you-earn (PAYE) | 25% of the tax due or Kshs. 10,000, whichever is higher. |
| Late payment of PAYE tax | 5% of the tax due and an interest of 1% per month |
| Failure to deduct Withholding VAT and Withholding Rental Income Tax | 10% of the amount of the tax involved |
| Late payment of Withholding Tax (Withholding Income Tax, Withholding VAT, Withholding Rental Income Tax) | 5% of the tax due |
| Late filing of MRI Returns | 5% of the tax due or Kshs. 2,000 whichever is higher for Individuals or 5% of the tax due or Kshs. 20,000 whichever is higher for Non-Individuals |
| Late payment of MRI | 5% of the tax due and an interest of 1% per month |
| Late payment of Stamp Duty. | 5% of the duty payable |
| Late filing of the Excise Duty return | 5% of the tax due or Kshs. 10,000, whichever is higher |
| Late payment of Excise Duty Tax | 5% of the tax due and an interest of 1% per month |
| Late filing of the VAT Return | 5% of the tax due or Kshs. 10,000 whichever is higher |
Late payment of the VAT tax | 5% of the tax due and an interest of 1% per month |
| Late filing of Income tax company or partnership returns | 5% of the tax due or Kshs. 20,000 whichever is higher |
Late payment of Income tax for Non-Individuals | 5% of the tax due and an interest of 1% per month |
| Late payment of Income tax for Non-Individuals | 5% of the tax due and an interest of 1% per month |
| KRA PIN-related offenses. | Ksh. 2,000 per offense.
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The Tax Compliance Certificate (TCC) is a vital document for individuals and businesses alike. It serves as proof of your tax compliance and can significantly impact various aspects of your professional life. From job applications to government tenders, a TCC is a requirement that cannot be ignored. Ensuring your taxes are filed and paid on time, as well as addressing any outstanding tax debts, is essential to maintain a valid TCC. The consequences of non-compliance can be harsh, with penalties and interest adding up. So, if you're looking to navigate the world of taxes in Kenya successfully, obtaining and maintaining a Tax Compliance Certificate is the way to go. Don't let the complexities of tax regulations overwhelm you; instead, empower yourself with knowledge and ensure you're always in good standing with the tax authorities.
Source:
Kenya Revenue Authority (KRA)
Brian Muchiri
Marketing & Design- ElevateHR Africa