1.0 RETURN REVIEW PROCEDURES

1.1 Purpose of Return Review

The main reason for a return review is to check the accuracy of the tax return and address the gaps or inconsistencies identified arising thereto in relation to tax period to curb against revenue loss.

1.2 Objectives of Return review

To address inconsistencies in the return filed by a taxpayer in terms of completeness and accuracy. This include transactions captured in the wrong field or not captured at all, decline in tax payments, perpetual credit filing for VAT, Nil filing, gaps in filing (Non filing), application by taxpayer to allow amendment of return downward, lumping of income in one field.

1.3 Procedure for Returns Review

1. Inconsistency report is prepared by the Tax Service Office on a monthly basis and send to the Chief Managers who oversee Compliance Management.
2. The affected taxpayers are allocated to the account managers by the Sectors managers
3. The account manager carries out a review of the inconsistencies for their respective taxpayer and may contact the taxpayer through a phone and thereafter send an email or a formal letter to request for information, arrange for inspection of factory/inventory or production of records to crosscheck the status of the return or returns in question in line with Section 59 of the Tax Procedure Act, 2015 (TPA, 2015)
4. Returns review report is prepared by the Account Manager for review by the Sector Manager and thereafter approved by the Chief Manger.
5. Official communication on the findings of the Return Review is send to the Taxpayer by the Chief Manager.
6. In case the taxpayer does not agree with the findings of the Return Review, the window to lodge an objection is open under Section 51 of the TPA, 2015

1.4 Timelines for the events

1. The time required to produce records for returns review should not be more than 7 days from the date the taxpayer is contacted
2. The period for review under this program should not be more than 6 months
3. In case the inconsistencies require further interventions, the case may be escalated to a Compliance Check with the approval of the Chief Manager.
4. The Chief Manager will send a formal letter to the taxpayer stating the need to subject the firm to a Compliance Check.

2.0 TAX AUDITS AND COMPLIANCE CHECKS

2.1 Purpose of audit

Tax audits are a crucial component of Kenya's taxation system, conducted by the Kenya Revenue Authority (KRA) to ensure that taxpayers adhere to the country's tax laws and regulations. The audits serve to verify the accuracy of the information provided by taxpayers through self-assessments, identify any discrepancies or errors, and ensure that taxes are correctly paid in full and on time.

2.2 Objective of Audit

To enhance tax compliance by mitigating against identified risks and ensuring accurate reporting. It involves review of taxpayer returns and use of 3^rd party data to enable selection of high-risk cases that affect revenue negatively. Risk profiled cases are approved by Risk profiling Committee or Compliance Management Committee.

2.3 Types of Audits

KRA conducts several types of audits. They are;

• Risk based Audit.
• Compliance Checks.
• Refunds Audit
• Investigative Audit.

2.4 Tax Audit Process

• Notice of intention to Audit
  Notice of intention to carry out a compliance check or audit by is send to the taxpayer giving a period of 14 days by Chief Managers. This is prescribed under Section 58 and 59 of the TPA, 2015 dealing with inspection of premises and production of information respectively.
• Review of documents
  Verification of taxpayer records is done within 30 days from the date of receipt by KRA Officers. The taxpayer may be asked to provide additional information to clarify issues that may arise during the audit.
• Issuing of Tax Audit Findings
  Upon completion of the verification process, findings will be shared with the taxpayer for review before a formal additional assessment is issued.
• Tax assessment
  In case irregularities are established, unpaid taxes related thereto is raised through i-tax and the taxpayer received a notice from the i-tax system. In addition, a covering letter maybe send to the taxpayer detailing the areas of additional assessment.
• Objections to tax assessments
  Where a taxpayer is not in agreement with a tax assessment, they have the right to object within 30 days of date of issue of the assessment as guided by Section 51 of the Tax Procedures Act 2015.
• Enforcement
  In case there is no objection to the assessment, the taxpayer is expected to pay the assessed taxes.
• Further Engagement by the taxpayer
  In case a taxpayer is aggrieved during any stage of the audit, he can reach out to the Chief Manager who signed the notice of intention to audit or Deputy Commissioner in charge of Compliance or Audit program, whichever is applicable.

2.5 Timelines for audit process

1. Audit process should take a period of 30 days but it is dependent on other factors such as availability of records/information, feedback from taxpayer on audit findings, complexity of the inquiry, investigation However, any deviation from the timelines set in the SLA is documented by the officers carrying out the audit and approved by the Sector Manager.
2. The Commissioner may amend a self-assessment within a period of five years from the date a return is filed. However, in cases of fraud, self-assessments shall be amended beyond five years.

3.0 REPORTING UNETHICAL BEHAVIOUR &/OR COMPLAINTS

3.1 Channels of reporting unethical behaviour or misconduct

1. Walk into any KRA offices countrywide and lodge a complaint at the Service Desk or request to see the Officer in Charge of the Tax Service office
2. Report at Complaints and Information Centre vide email: cic@kra.go.ke or telephone number +254 (0)202817700, +254(0)202817800 or Visit in person to 26^th Floor, Times Towers, and Haile-Selassie Avenue, Nairobi.
3. Whistleblowing: Report anonymously via iWhistle.

Call Contact Centre on +254 204999999, +254 7111099999 or email callcentre@kra.go.ke

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