The Kenya Revenue Authority has explained what taxpayers should do after receiving a message alerting them that their income was subject to Withholding Tax.
In a statement issued on Thursday, March 5, KRA clarified that the majority of those who received the message were Kenyans who offer consultancy services.
It stated that the message meant that the consultants owed the government money in the form of unpaid Applicable Tax.
The Taxman noted that despite their clients deducting 5 percent withholding tax from their pay, the consultants still had to remit some money to the state as well.
"If you invoice Ksh100,000 and the client deducts Ksh5,000, that is Withholding Tax. It is an advance and not the final tax.
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"There is something known as the applicable tax rate. For this case, it's 30 per cent. Since the client has paid 5 percent, you need to remit the remaining 25 percent, which is Ksh25,000," the Agency explained.
KRA explained that when filing returns using the example given, consultants would need to declare Ksh100,000, and not Ksh95,000.
"Just make sure you pay your applicable tax and get done with it. That is it! Declare, file, and pay," KRA reiterated.
KRA advised those in the consulting business to generate a Payment Reference Number on the iTax portal to complete the payment process.
Kenyans lamented upon learning about the Applicable Tax, stating that remitting Ksh30,000 was too much for consultants.
A number of them raised concerns about what would happen in cases where those they offered services to did not pay the 5 percent Withholding Tax.
The new tax filing procedure has posed a challenge to Kenyans, who claim that they have not familiarised themselves with the new process, especially with the eTims.
KRA stated that its doors were open to help with the filing process and urged Kenyans to file their dues before the June 30 deadline.
