KRA Penalty & Interest Waiver / Remission Services in Kenya

Tax penalties and interests are a headache for Kenyan taxpayers because they add to their tax liabilities. They are a financial burden that leads to operational and legal constraints. Whether you’re an individual taxpayer or a business owner, these punitive charges are bad news.

If you’re struggling with KRA penalties and interests, you don’t have to walk alone. You also may not need to pay all of it. At Gichuri & Partners, we help you apply for a KRA penalty waiver and interest remission. Our goal is to help reduce your tax burden legally, through a structured and professional approach.

What is a KRA Penalty Waiver?

A KRA penalty waiver is a formal request or prayer to the Kenya Revenue Authority (KRA) Commissioner to cancel or reduce a penalty or interest charged on your tax account. It is also called a remission. KRA imposes penalties and interest to force taxpayers to be tax compliant. Some non-compliance issues that may lead to these punitive charges include:

• Late filing of tax returns.
• Late payment of taxes.
• Tax evasion.
• Failure to deduct withholding taxes.

Applying for a penalty/interest waiver in Kenya is governed by Section 89(7) of the Tax Procedures Act. According to the section, a waiver:

• Applies to the penalties and interest, and not the principal tax.
• Requires you to pay the principal tax in full before application.
• Is not guaranteed- it’s granted on a case-by-case basis.
• Is not an automatic process- a taxpayer must submit a well-prepared and evidence-backed application.

Who Qualifies for Tax Penalties Reduction in Kenya

Not every taxpayer is eligible for tax penalty reduction. You must demonstrate good faith and a clean track record for the Commissioner to heed your request. The request must also be justified by strong grounds and not an emotional reaction. Therefore, to be eligible, a taxpayer must:

• Settle the principal tax in full.
• Show consistent tax compliance through timely filings and tax payments.
• Present a valid and well-supported reason for the tax delays.

What are these valid and well-supported grounds for tax delays that resulted in penalties and interest? They include:

• Financial hardships.
• Medical emergencies.
• System errors.
• Third-party errors (accountant, tax consultant, etc).
• No income to be taxed (mostly for individual taxpayers).

We’ve seen KRA reject penalty waiver applications before for several reasons. These include a lack of supporting documentation, generic justifications, poor tax compliance history, and cases involving fraud and tax evasion.

How to Apply for Remission in Kenya

As we have mentioned, asking KRA to cancel or reduce your penalties and interests is not an easy feat. There are terms and conditions, which include a strict application procedure. It’s crucial to fully understand how to apply for remission in Kenya.

KRA applies the clean hands principle when it comes to remission matters. Therefore, applying for remission involves making sure your tax history is clean. This is where a KRA tax agent comes in handy. Most of the activities required to streamline your tax history work better when a professional is in charge. These include:

• Conducting a tax health check.
• Filing all outstanding returns.
• Reconciling and confirming the principal tax.

Follow these steps to apply for a KRA penalty & interest waiver in Kenya:

Step #1: Carry Out a Tax Health Check

You want to be sure your tax compliance is in check before asking KRA to cancel your penalties and interest. Review the following:

• All registered tax obligations.
• Filed and unfiled returns.
• The outstanding principal tax.
• All outstanding penalties and interest.
• Any suspicious compliance red flags.

Step #2: File All Unfiled Returns

Ensure all registered tax returns are filed, including NIL returns. Most taxpayers focus only on the tax periods with penalties, which is wrong. Even a single missing return can ruin your remission application.

Step #3: Reconcile and Confirm the Principal Tax

The Tax Procedures Act clearly states that a taxpayer must clear the outstanding principal tax to be eligible for a penalty and interest waiver. You need to separate the principal tax from the penalties and interest by reconciling your tax records with KRA’s figures. If you notice any discrepancies, you might want to object to the tax assessment instead of applying for a waiver.

Step #4: Pay the Principal Tax

Once you’ve determined the principal tax, go to iTax and generate a payment registration number (PRN). Pay the owed tax in full. If you can’t pay the full amount, apply for a payment plan. Remember to safely keep the payment and acknowledgement receipts.

Step #5: Build a Solid Justification for Remission

Why should the KRA Commissioner cancel or reduce your penalty or interest? Your justification should answer this question. A justification consists of three parts:

• The cause: What went wrong?
• The impact: How did the cause affect your ability to comply with tax requirements?
• The resolution: What has changed to ensure tax compliance moving forward?

Step #6: Gather Supporting Documentation

Your claim above must be backed by verifiable evidence. Gather the documentation to support your case, including bank statements, medical records, termination letters, and correspondence for system issues.

Step # 7: Write the Waiver Application Letter

A good waiver application letter should have the following structure:

• Your taxpayer details, including name, KRA PIN, and tax obligations.
• The background/context of the liability.
• A clear and structured justification.
• A compliance statement confirming all returns are filed and the principal tax is paid.
• A request explicitly asking the Commissioner to cancel or reduce penalties and interests.
• A list of attached supporting documents.

Remember to use a professional tone.

Step # 8: Submit the Waiver Application Letter

There are two ways to submit your KRA penalty and interest waiver application:

• Via iTax
• Submit a manual application to the nearest KRA Tax Service Office (TSO).

The manual method is self-explanatory. We will talk about the online application via iTax. Follow these steps:

1. Go to the iTax portal.
2. Log in to your tax account using your KRA PIN and password.
3. Navigate to Debt and Enforcement.
4. Select “Apply for Waiver” from the drop-down menu.
5. Select your Tax Obligation and relevant periods.
6. Input Waiver Details.
7. Provide your reason for remission, briefly, or a summary of your letter.
8. Upload supporting documents.
9. Review all the entries carefully. Click Submit.
10. Download the Acknowledgement Receipt.

Our  KRA Penalty & Interest Waiver/Remission Services

We don’t just help you submit a waiver application. At Gichuri & Partners, we strategically build a winning case to help you reduce your tax liability.

• Case Review & Assessment: Our first assignment is to professionally assess and review your case to determine if, realistically, you can succeed. We analyze your iTax profile, identify any compliance risks, and determine if a waiver is the best way forward. We can also advise on pursuing the objection, ADR, and tax amnesty where applicable.
• Compliance Cleanup: We file all your outstanding tax returns on your behalf, correct any inconsistencies, and align your tax profile with KRA’s internal compliance expectations.
• Verify Your Principal Tax: Our in-house accountants will reconcile your tax ledger to confirm KRA’s figures and ascertain that the indicated principal tax is accurate. We help you prevent overpayments before applying for a waiver.
• Build Your Case: What evidence do you have to build the best possible case? We help you identify the best evidence and build a strong case. We also help gather solid supporting documentation. Lastly, we eliminate any contradictory or weak materials.
• Write the Waiver Application Letter: A waiver letter is the primary persuasion tool in a remission application. We draft a well-structured letter that is clear, concise, and compelling.
• Submitting the Waiver Application: We handle the iTax application and submission of your penalty waiver request.
• Follow-Up: We actively follow up with KRA officers, respond to their queries and requests for additional documentation, and push the application through their internal review channels. We follow up until KRA communicates the outcome.
• Outcome Management: The KRA Commissioner can approve, partially approve, or reject a penalty waiver application. Whatever the outcome, we are there every step of the way to help you manage it. Where the application is approved, we confirm the implementation and update your tax position. In case of a rejection, we evaluate alternative options like ADR and payment restructuring.

Why Choose Us?

Here’s why you should choose us for your KRA penalty waiver application:

• Fully Licensed by KRA: We are registered and licensed by the KRA Tax Agents Committee to represent and assist Kenyan taxpayers in all tax matters, including waiver applications.
• Proven Track Record: We’ve helped thousands of Kenyan taxpayers handle tax disputes and waiver applications for over a decade.
• Experience: Gichuri & Partners experts have a deep understanding of the Kenyan tax environment and legal procedures. We’ve been in this sector for over 10 years now.
• Strategic Tax Advisory: We don’t stop at waiver application. We also advise on other alternative routes like ADR, objection, and litigation.

Take Control of Your Tax Situation!

Tax penalties and interests can heavily weigh on your tax position and add more strain on your financial situation. Thankfully, with the right strategy, you can convince KRA to reduce or eliminate these punitive charges. At Gichuri & Partners, we provide comprehensive KRA penalty waiver/remission services to help reduce your tax liability. Book a free consultation today.