How to Get a Tax Compliance Certificate For Affordable Houses

The government is making it mandatory for any Kenyan who will apply to buy a house or houses under the Affordable Housing Programme to have a tax compliance certificate (TCC).

This means that before being allocated any house, you must have tax. compliance.

Why the requirement for a Tax Compliance Certificate?

It is simple. This requirement is for income tax purposes.

Paying taxes is a legal requirement. Every Kenyan pays tax, but that is mostly consumption taxes, e.g. VAT. Surprisingly, many people do not report their income to the tax commissioner.

What income is expected to be reported to get a Tax Compliance Certificate?

All incomes.

Positive income – in the year.
Negative income – losses carried forward from previous years of income. Not transacted.

How will the requirement for a Tax Compliance Certificate affect the uptake of the houses?

The Affordable Houses were meant for those Kenyans who do not have houses. They must be:

Make the decision
Be 18 years of age and above
Kenyan Citizen.
Have a National ID.
Have a deposit – this may change.
Afford to pay the monthly – kshs 1,500 for a one bedroom or kshs 3,000 for a three bedroom house.
Tax compliance certificate.

In 2019 Kenya National Population and Housing Census: Volume III conducted by Kenya National Bureau of Statistics.

The Kenya’s population was 47.6 million.

Homeownership – 7,379,485 which is 15.5% of the total population owned their homes – of this 6,387,020 owned homes in rural areas while 992,465 own homes in urban areas.

Rentals – 4,660,027 – 9.8% of the population were living in rented homes – 3,669,425 rent houses in urban areas while 990,602 rent houses in rural.

Two Groups of People WHo WIll Require a Tax Compliance Certificate

Those Kenyans can be grouped into two groups:

In employment.
Not in employment.

For those not in employment, they can be grouped into two categories:

Earn an income, e.g. business owners, or investors, e.g. forex traders, betting, etc.
Do not earn income – old parents whose children can pay, or children whose parents can pay.

Note:

The majority of the people in employment will benefit as long as their employers has been remitting the PAYE, they are compliant.
The majority of people not in employment but earn income may not be tax compliant and, hence may not benefit.
For the people who are not employed and do not earn income, they may not also benefit unless those people who will pay for them will be tax compliant.

The requirement for TCC is likely to lock out many people out in the initial stages but as more people become tax compliant. Initially, more people in employment will qualify.

We have been talking about Tax Compliance Certificate.

What is a Tax Compliance Certificate or a TCC?

1. A document from the tax commissioner, saying you are tax compliant (it does not mean that you have no tax liabilities – sometimes you have liabilities, but you are paying them through an agreement with the tax commissioner).

2. The certificate is issued for 1 year – you renew it every year.

3. It is issued through i-Tax – you must have migrated.

4. Must have a PIN – must be over 18 years old.

What to do to get a Tax Compliance Certificate

1. Migrate to i-Tax – a Tax Compliance Certificate (TCC) is applied only on i-Tax.

2. Clear your tax ledger – pay all the principles taxes, e.g. Income Tax, VAT.

3. Apply for Amnesty – fines for failure to file tax returns, penalties and interests you have up to June 2024.

4. Once you have no tax debts – tax ledger clean – principles, penalties or interest etc., you will then apply for your Tax Compliance Certificate (TCC) and you will get it.

5. Remember you need to Onboard to TIMs or e-TIMS depending on your circumstances.

Once you do this, you don’t need anyone to get it for you, you can do it but if you cannot, then look for assistance. Many people are dealing with tax issues and they will help you.

Governments Game Plan for the Tax Compliance Certificate

Improved tax compliance.
I-Tax migration.
New tax registrations – over 29,022,314 Kenyans are over 18 years (2019 Census) How many have PINs?

Summary

A TCC will be required for the Affordable Housing Programme.
You must be tax compliant – we have explained the process.

Thank you for reading the post and tell us what you think.

dr. wakaguyu W.K.