Penalties imposed on non-lodgement of returns and documents range from an initial penalty of between K500 to K5,000 per outstanding return, plus an ongoing penalty of K50 per day. In some cases the IRC has the power to impose higher penalties, linked to tax due, for non-lodgement of returns and documents. Penalties for late payment of tax will typically be 20% per annum of the tax outstanding. In some cases the IRC has the power to impose higher penalties for late payment. Where an agreement is entered into by the taxpayer and IRC Debt Management for instalment payments, negotiation of late payment penalties should be included in the discussion.Remittance of penalties:
The IRC does have the power to remit penalties in circumstances where they consider it is reasonable to do so. However, it is important to note that penalties will be automatically applied and taxpayers will need to formally seek remission after the penalties have already been imposed. The IRC have indicated that the circumstances in which remission will be granted are quite limited.
Directors’ liability for salary or wages tax:
In 2010, the Government amended the Income Tax Act to impose a personal liability on the directors of a company when salary or wages tax is not remitted to the IRC by the due date. The IRC has advised that it has commenced issuing director penalty notices under these new laws, and will continue to pursue directors for outstanding salary or wages tax.