Thousands of employees in both public and private sectors could miss out on their September salaries after Kenya Revenue Authority (KRA) deactivated their Personal Identification Numbers (PINs).
Those who have been affected include taxpayers who have pending Value Added Tax (VAT) obligations that could have arisen either from payments for private consultancies outside their workplace or directorships in personal companies that are not tax compliant.
On Wednesday, the taxman received thousands of complaints from those whose PINs had been de-listed, a day after announcing that over 95,000 VAT non-compliant taxpayers would have their accounts de-registered.
The controversial plan by KRA, whose legal basis has come under question, is intended to crack down on tax evaders.
Several employers have notified affected employees to update their PIN accounts with KRA, failure to which they would not receive their salaries.
“Please note that your KRA pin has been suspended and I therefore cannot file August 2017 pay as you earn (PAYE) tax in iTax,” said one such notice to an employee seen by the Business Daily.
Tax experts and lawyers have poked holes on the decision by KRA, questioning its legal basis.
“If you deregister a person unfairly, you are likely to face legal consequences,” warned Deloitte East Africa Tax Leader Nikhil Hira.
Data from the tax authority shows that there are more than 10.6 million registered taxpayers, but only 5.8 million have registered on the online iTax platform.
Those who their PINs have been delisted are also effectively blocked from making critical government transactions that require proof of active registration as a taxpayer.
Registration of land titles, approval of development plans, registration, transfer and licensing of motor vehicles, and registration of business names and companies are some of key services that require one have an active Pin number.
Others critical transactions that need active tax account include underwriting of insurance policies, customs clearing and forwarding, payment of deposits for power connections, supplying goods and services to the State, as well as opening accounts with financial institutions.
KRA earlier warned that taxpayers who had also failed to migrate their PIN information to the iTax — KRA’s online tax payment portal and compliant taxpayers who have not filed returns, or are submitting nil returns despite evidence of having steady incomes would have their accounts deactivated.
Lawyers and tax experts opposes the move by KRA arguing that holding a tax PIN is the right of every citizen that cannot be taken away by anyone without following due process.
“KRA does not issue PINs to citizens as a favour but as provided for in law, in the same way the Department of Registration of Persons issues Identity Cards or Passports,” Nairobi lawyer Nashon Aluoka had said.
“It is an instrument that every adult needs to transact the business of life and meet their obligations as citizens and can only be taken away as provided for in law or through a court order,” he argued.