Why You Need a KRA PIN and Who should have Kra Pin
So why would you get one?
Primarily in Kenya, a Personal Identification Number (PIN) is the taxpayers’ identification for Income Tax purposes. But a PIN is useful in other situations as well. They are:-
1.Processing of Your Tax Refunds: Where a taxpayer has submitted returns which result in a repayment or refund; a PIN is necessary to get the refund. The KRA will advise you on when it will be necessary to carry out an audit before payment of the refund claim. There are two types of tax refunds:-
Income Tax Refund:
- Processed within 120 days from the day of processing the return where the return is for the immediate past year of income.
- Processed within 30 days from the date of processing the return where the return is for a year of income other than the immediate past year of income.
- Processed within 90 days of submission of application for normal refunds and 60 days for withholding VAT refunds
2. Application for Tax Exemption: Tax Exemption Certificates are processed and issued within 1 month of application, subject to submission of all relevant documentation and the taxpayer meeting all requirements to be granted exemption from paying tax..
3. Acquiring Tax Clearance /Compliance Certificates: Tax clearance or Compliance Certificate is given upon application and confirmation that there are no tax arrears.
Then of course, with a KRA PIN, banking institutions and any other organisations like the Higher Education Loans Board (HELB) that ask for it will be able to trace you to your doorstep. Bringing good or bad news depending on how good your relationship with rules and laws of this republic has been.
Students who are beneficiaries of the Higher Education Loans Board (HELB) are required to repay their loans without defaulting. HELB has however been experiencing difficulties in recovering the loans. Some of the students have secured jobs abroad and thus it would be very difficult to trace them to repay the loans. For the graduates that have been left behind, the loans body has partnered with financial institutions to track down defaulters. For instance, it now has an arrangement with the Credit Reference Bureau Africa which monitors your credit worthiness, by making use of your KRA PIN. This means that if you keep on defaulting on your loans, you will get a bad credit score that will make it hard for a bank or any other finance institution to advance you a loan.
All financial institutions today are able to get your credit report from the licensed reference bureaus as part of the loan appraisal process. It helps them decide whether to lend and what conditions to impose depending on what the report reveals about you. At the moment, Kenya’s law only allows banks and HELB to list defaulters. With time, micro-finance institutions and utility providers like KPLC, telecoms and SACCOs will be able to list people.This will mostly rely on your KRA PIN, with a few other support documents notwithstanding..