PAY YOUR TAXES, AVOID HUGE TAX PENALTIES

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Tax crimes don’t pay, you end up paying so much after hiding taxes from the government in rogue ways. When the law catches up with you, you hit a dead end.

Take for instance the Paleah Stores Ltd, a food and materials wholesaler who now has to pay KRA Kshs. 9.3 Billion following a ruling by Nairobi Tax Tribunal on 22nd January. Paleah had argued before Court that it was a victim of bad professional advice since the tax assessment conducted by KRA did not reflect the true status of its records between 2008 to 2014.

KRA on the other hand maintained that the evidence provided by Paleah for scrutiny resulted in an assessment that led to the Kshs. 9.3 Billion tax arrears. The arrears which Paleah has no option but to pay KRA, are in terms of Corporation Tax of Kshs. 1.3 Billion and Value Added Tax worth Kshs. 7.8 Billion.

The Nairobi Tax Tribunal declared that Paleah did not comply with the statutory obligation of keeping proper records of tax. This is a clear indication that as you begin your business, you should be aware of the varied tax laws so that you are not led astray by rogue tax advisors. Better still, seek guidance from KRA tax experts to avoid being misled.

Paleah must have thought hard on how to evade the tax net, causing the company to file an appeal against KRA, in the tax evasion case. However, the last nail was placed on its coffin this month, with the Court declaring that KRA was right to demand the Kshs. 9.3 Billion.

KRA noted that Paleah had under-declared its profits for the period under investigations and its appeal filed in 2016 was an abuse of the court process. The Tax Tribunal stated that Paleah had also failed to make a case against KRA on account of the alleged unfairness.

Well, KRA has several options of settling issues such as tax evasion or unfiled taxes because of improper tax guidance. The Voluntary Tax Disclosure Program allows a taxpayer to declare tax arrears to the Commissioner and get a waiver on the arrears through the guidance of KRA tax experts.

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