Employees with one income relieved of filing tax returns

Employees whose only source of income is their salary are not expected to file their tax returns, Kenya Revenue Authority has said, putting to rest confusion that has gripped the country since Finance Minister, Uhuru Kenyatta presented the Budget statement on June 8.

The tax collector said amendment to section 52B (I) of the Income Tax Act announced by the minister, means those required to file tax returns are persons with income other than from employment, holding more than one job, or seeking refund of taxes paid, as well as directors other than full-time service directors.

“Employees qualifying under the amended requirement wishing to file returns may continue doing so as before,” KRA said in statement published in the local dailies Thursday.

In his Budget proposals for the fiscal year 2011/12, the minister recommended that employers file tax returns on behalf of their workers to avoid duplication.

“To reduce unnecessary filing of tax returns, I propose to abolish the filing of returns by employees who have no other income and their PAYE has been paid to the exchequer by their employers,” Mr Kenyatta, who is also a Deputy Prime Minister, told Parliament.
Finance Bill

The changes, which are contained in the Finance Bill 2011, are dated June 8, 2011, meaning the new rules are well in force ahead of the June 30 deadline when all employees are required to have filed all their tax returns for 2010.

Since the minister’s statement, however, there has been confusion with some employers instructing their employees to file their tax returns to beat the traditional June 30 deadline.

This is because, before amendment, employed Kenyans were required by law to file a self-assessment return every year, which should be done before the end of the current fiscal year on June 30.

The December 2010 returns are due by the end of this month.