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The Kenya Revenue Authority (KRA) has made significant strides in modernizing its tax administration system by migrating VAT and Income Tax Ledger balances from the Legacy System to the iTax System. This transition is part of KRA’s ongoing efforts to enhance efficiency and transparency in tax administration. Below, we provide a detailed overview of what this migration means for taxpayers and the actions required.

Accessing Migrated Balances

Taxpayers can now access their migrated ledger balances directly through their iTax profiles. These balances have been communicated via the iTax registered email addresses of the respective taxpayers, ensuring that all relevant parties are informed.

How to Access Your Migrated Balances:

This migration ensures that taxpayers have real-time access to their historical tax information, providing a more seamless and integrated approach to tax management.

Adjustments to Migrated Balances

It’s important to understand that the migrated debit and credit balances are not final and may be subject to adjustments. These adjustments are based on any additional information provided that was not considered during the initial migration.

• Credit Balances: Validated credit balances that qualify as tax overpayments will be available for utilization in accordance with Section 47(1)(a) of the Tax Procedures Act, CAP 469B. This means that these overpayments can be applied to offset future tax liabilities, offering taxpayers a flexible way to manage their tax obligations.

• Debit Balances: The migrated debit balances are not new tax assessments. They are not considered demands or tax/appealable decisions, and as such, they do not immediately trigger the objection or appeal process. Instead, these balances are subject to revalidation, allowing both KRA and the taxpayer to verify their accuracy based on additional information where applicable.

Resolution Timeline for Debit Balances

Taxpayers have until 31st December 2024 to raise any concerns or discrepancies regarding the migrated debit balances. This period allows for a thorough review and revalidation process, ensuring that the final balances are accurate and reflective of the taxpayer’s actual liabilities.

Key Actions for Taxpayers:

• Review your migrated debit balances as soon as possible.
• Raise any concerns or provide additional information to KRA by the 31st December 2024 deadline.
• If you agree with the communicated debit balances, arrange to pay the outstanding taxes promptly.

After the revalidation deadline, any unresolved debit balances will be confirmed, and KRA will issue demand notices for the taxes due. It’s in the taxpayer’s best interest to resolve any discrepancies within the provided timeframe to avoid any complications.

Impact on Tax Compliance

During the revalidation process, taxpayers will continue to have access to necessary tax services, including the issuance of Tax Compliance Certificates (TCCs), provided all other legal requirements are met. This approach ensures that the revalidation of ledger balances does not hinder taxpayers from maintaining compliance or accessing essential services.

Final Thoughts

The migration of ledger balances to the iTax System marks a significant improvement in the way KRA manages and communicates tax obligations. By providing clear guidelines and a reasonable timeline for addressing concerns, KRA is ensuring that taxpayers have the opportunity to review and validate their migrated balances.

Taxpayers are encouraged to take a proactive approach by reviewing their migrated balances, addressing any concerns, and making necessary arrangements for payment. By doing so, they can ensure continued compliance and avoid potential issues down the line.

For any further assistance or inquiries, taxpayers are advised to contact us to ensure a smooth transition and resolution of any outstanding issues