THE LAW

Section 29 (5) and (6)

(5) Subject to Subsection (6), an assessment under Subsection (1) shall not be made after five years immediately following the last date of the reporting period to which the assessment relates.

(6) Subsection (5) shall not apply in the case of gross or willful neglect, evasion or fraud by a taxpayer.”

ANALYSIS

As per the law, all assessments ought to be made within five years. In the same breath section 23 of the TPA and section 54A of the Income Tax Act require a tax payer to keep documents for that period of time (5 years). The exemption to this rule is found in section 31(4) of TPA which gives the Kenya Revenue Authority leave to issue an assessment beyond five years when there is evidence of gross or willful neglect, fraud or evasion.

The KRA needs to  demonstrate that it Is necessary to look into the taxpayer’s affairs beyond the statutory five years, and can so so by proving that there is gross or wilful neglect, evasion, or fraud by, or on behalf of, the taxpayer this are the only circumstances that the KRA can find refu...