Ever wondered what will happen if you don’t file your returns? If yes then it’s just the right note for you. Filling your tax after the deadline or neglecting to file your return can cause penalties and delay in benefits associated with early filing and paying taxes. It is important to file in time to avoid such consequences. Here are some of the offenses and the penalties of late filling in some disciplines;
Late Filing Of PAY -AS- YOU EARN ( PAYE)
Pay as you earn (PAYE) is the tax deducted from an employed worker. Such income would include the wages, salary, leave pay, sick pay, commission, bonus, traveling, and fees among other types of monetary benefits given by the employees by their employer. The employer has the mandate to register with KRA to fulfill such kind of obligations. These taxes are to be deducted from every employee and submitted to KRA by the 9th day of every month. PAYE is only deducted from those employees with salaries of more than Ksh. 24,000. PAYE does not apply to the meals, the night outs, the medical cover, and pension.
Late PAYE Payment Penalties
Failure to pay PAYE one will have a penalty of 25% of the tax due or required to pay Ksh. 10,000 depending on whichever is higher. Late payers would have a 5% tax due and interest of 1% per month.
Withholding Rental income
The commissioner will appoint withholding agents and write to them clarifying on the requirements for withholding tax. This can be sent electronically to the respective property agents. The payments should be made on the 20th day of the subsequent month using the iTax portal online. Failure to pay such taxes would incur a penalty of 5% of the amount involved.
Monthly Rental Income (MRI)Returns Penalty
The Finance Act 2015 and became effective on the 1st of January 2016. The tax is on the residential rental income. This tax is paid by the company or individual for the use of a residential property. If you are wondering what type of persons pay such tax, well, only those with incomes of between 288,000 (24,000/ Month) and KES 15 million per year. This means that 10% of the gross rent will be paid. This form of tax is paid monthly and one should file the returns monthly. Well if you have a commercial property, you are a non-resident landlord and landlords earning more than 15 million a year, you are exempted from this type of tax but you must declare your rental income annually. Failure to pay this tax would give you a penalty of 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. A penalty of 5% of the tax due and interest of 1% per month for the late payers until the full amount is paid.
Late filing of the Excise Duty return
This type of tax is charged on specific goods and services that are imported or manufactured locally. The tax usually varies depending on the value of the products such would include wine, spirits, beer, drinks, recorded tapes, furniture, and gas. If you fail to pay, a penalty of 5% of the tax due or Kshs. 10,000 is paid, depending on whichever is higher. If you pay late then a penalty of 5% of the tax due and an interest of 1% per month will be charged by the KRA.
Late filing of the VAT Return
Value Added Tax (VAT) Is the tax levied on every vatable item you purchase. This type of tax must be filed on or before the 20th of the following month of sales. Failure to pay this type of tax will lead to a penalty of 5% of the tax due or Kshs. 10,000 whichever is higher while those who pay late face a penalty of 5% of the tax due and an interest of 1% per month
Late filing of Income Tax Company or partnership returns
Income tax is charged on business income or profession, employment income, rental income, interests, dividends, pension, digital marketing among others. Taxation on companies would include corporation tax which is usually levied on limited companies, Trusts, and Cooperatives on their annual income. This only applies to companies within Kenya. Those companies that operate abroad and have a branch in Kenya are required to pay such tax. Failure to pay such tax would cost a penalty of 5% of the tax due or Kshs. 20,000 whichever is higher or late payment of tax leads to a penalty of 5% of the tax due and an interest of 1% per month until full payment. In conclusion, it is very important to pay taxes to avoid these heavy penalties.
