KRA goes after workers’ hidden perks; overtime, leave pay, and per diems
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KRA goes after workers' hidden perks; overtime, leave pay and per diems, a move that will see thousands of employees pay taxes
KRA goes after workers’ hidden perks; overtime, leave pay and per diems, a move that will see thousands of employees pay taxes.
The Kenya Revenue Authority (KRA) has begun a campaign against businesses that understate their payrolls, which will result in thousands of workers being required to pay taxes like overtime pay, leave pay, and per diems.
The taxman is after a slew of billion-dollar employee incentives and perks that were given to top workers but were exempt from the 30% Pay As You Earn law (PAYE).
This comes after official data raised concerns about possible tax fraud by revealing an additional 230,935 workers earning more than Sh100,000 per month but who were not included in State filings.
The Kenya National Bureau of Statistics (KNBS) revised the pay data for 2.9 million Kenyans employed in the formal sector for the four years to 2020 after it emerged that firms have been omitting some regular perks while reporting the workers’ payroll.
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The KRA has now threatened businesses with fines of up to 25% of the tax that was evaded if they fail to disclose the secret allowances.
The taxman wants the firms to inform it of perks such as telephone allowances, dinner monies, and per diems in excess of Sh2,000 per day, and non-monetary benefits like gym fees in excess of Sh3,000 monthly.
It is also pushing the companies to declare workers’ private expenditures like payment of school fees, insurance, and utility bills that were met by the employer.
“The commissioner may impose a penalty…if you fail to deduct tax upon payment of emoluments to an employee,” said the notice sent to employers on December 6.
The KRA is racing to bring more people into the tax bracket and curb tax cheating and evasion in the quest to meet targets.
Kenya made a commitment to the International Monetary Fund (IMF) to recover unpaid taxes from high-net-worth professionals and traders in an effort to raise national revenues.
The KRA is flagging wealthy individuals that have been hiding their sources of income while engaging in luxury spending and accumulation of property, including the purchase of homes and big cars.
The revision of payroll filings by the KNBS saw those earning over Sh100,000 monthly jump from 79,909 captured in 2020 to 310,884, outing over 230,000 top earners whose firms have been under-declaring their salaries.
Last year, the number of workers earning over Sh100,000 jumped 15 percent or 48,000 more to 358,833.
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