The Finance Act 2023 introduced a tax amnesty, detailed in Section 37E of the Tax Procedures Act, 2015, focused on providing relief from interest and penalties on tax debt. This amnesty applies to two distinct categories of taxpayers:
- Individuals or entities with penalties and interest but no outstanding principal taxes for periods until December 31, 2022.
- Individuals or entities with principal tax obligations accrued up to December 31, 2022, who fully settle their outstanding principal tax debt by June 30, 2024.
The Finance Act 2023 also removed tax waiver and abandonment provisions, urging taxpayers to seize the opportunity presented by the tax amnesty. The purpose of these guidelines is to offer clear instructions to taxpayers regarding the implementation of the tax amnesty.
Eligibility criteria for the tax amnesty include:
- Taxpayers without any outstanding principal tax but with penalties and interest until December 31, 2022, qualify automatically without the need to apply.
- Taxpayers with outstanding principal tax debts up to December 31, 2022, must apply for the amnesty. Their application should be accompanied by a proposed payment plan for the outstanding principal taxes.
- Taxpayers with self-assessments or amended assessments relating to periods up to December 31, 2022, but generated after this date, are eligible as long as they settle the outstanding principal taxes from these assessments before June 30, 2024.
- Taxpayers with disputed tax liabilities can also benefit from the amnesty, provided they meet the specified conditions.
Exclusions from the tax amnesty encompass interest and penalties imposed under Section 85 (tax avoidance) of the Tax Procedures Act, 2015, and all penalties and interest related to tax debts accumulated after December 31, 2022. The tax amnesty came into effect on September 1, 2023, and will remain in force until June 30, 2024.
The processing of the tax amnesty is based on the tax period and tax obligation. The tax amnesty encompasses all tax categories governed by tax laws within the Tax Procedures Act, 2015 and to qualify for the remission of interest and penalties, taxpayers must adhere to specific conditions:
- Amnesty is granted only for interest and penalties linked to principal taxes due until December 31, 2022, provided the principal tax is paid in full by June 30, 2024. Failure to settle the principal tax by this date disqualifies penalties and interest from the amnesty.
- Taxpayers with tax liabilities for periods up to December 31, 2022, resulting from return amendments, reconciliations, or unresolved system issues, must collaborate with their respective Tax Service Office (TSO) to conclude the process before paying the outstanding principal taxes to qualify for the amnesty.
- Taxpayers involved in disputes regarding tax liabilities for periods up to December 31, 2022, can engage with the Commissioner to settle the disputes and establish a payment plan for the agreed amounts.
The application for tax amnesty involves several steps:
- Eligible taxpayers must apply through the system, which will display their debt status across all tax categories.
- Taxpayers can either make a full payment of the principal tax or negotiate a payment plan with the Commissioner.
- Those opting for installment payments will specify the frequency of payments within the embedded payment plan agreement in the system.
- The payment plan cannot extend beyond June 30, 2024, and any penalties and interest related to the principal tax not paid by this date will not be eligible for amnesty.
- Acceptance of the amnesty’s terms and conditions obliges the taxpayer to honor the payment plan agreement.
- Amnesty is granted upon full payment of the final installment as stipulated in the payment plan agreement.
Regarding the treatment of the balance of tax and monthly taxes:
Taxpayers with a year-end in December 2022 are allowed to pay the balance of tax by April 30, 2023. Consequently, interest and penalties related to principal tax due until December 31, 2022, are eligible for the amnesty.
Monthly tax payments for December 2022 are eligible for amnesty if paid within the specified due dates in the subsequent month, even though the tax point falls within December 2022.