The Tax Administration (Remission of Interest and Penalties) Regulations, 2020 which is made under section 70(2) of the Act has 11 regulations which include:
The Manner for Applying : Application for remission of interest or penalty shall be made by a person assessed with interest or penalty in a prescribed format.
Persons Eligible for Remission: Eligibility is for a person who- make voluntary disclosure of his/her tax liability; with no pending objections or appeals related to the tax debt under application for remission of interest or penalty; taken initiatives to declare his previous outstanding tax liabilities; agreed to pay the whole of his principal tax liability on the due date to be prescribed by the Commissioner General; and has applied to the Commissioner General for remission.
Determination and Criteria for Remission: The Commissioner General shall grant remission to the whole or part of interest or penalty to a person who has shown good cause in support of the application. Financial hardship shall not be considered a good cause unless evidence is provided to prove that the hardship: existed when the tax liability under application for remission of interest or penalty was due and payable; was the sole reason for failure to the pay the tax on due date; was communicated to the Commissioner General at the time when the tax liability was due and payable; will persist to a period of not less than one year from the date of the application.
Payment of Principal Tax: The principal tax for a person whose application for remission of interest or penalty has been granted shall be paid on the date specified by the Commissioner General or a date extended under the Act.
Exclusion of certain Categories of Interest or Penalty: Interest or penalty arising from the following shall not be remitted: an order of compounding an offence; breaches related to acquisition or use of EFD devices; fraudulent evasion of taxes; tax liability established from a tax audit or investigation; failure to pay income tax payable by a way of withholding tax mechanism under the Income Tax Act; VAT; excise duty; airport service charge; or any other tax liability which the applicant has statutory obligation to pay as an agent of the Authority to collect from third parties and pay the same to the Commissioner; penalty arising from failure to file tax returns under section 78 of the Tax Administration Act and failure to maintain documents under section 77 of the Act.
The Tax Administration (Remission of Interest and Penalties) Regulations, 2020 are very important and have come timely given the challenges faced by some taxpayers in getting remission of interest and penalties after the expiration of the tax amnesty order and the challenges of Covid-19 etc.
However the stringent criteria for remission e.g on financial hardship may exclude a lot of taxpayers from ability to obtain relief of interest. Also the regulations could be specific on what would amount to a good cause to qualify for remission instead of leaving this to the discretion of the Commissioner General.
Further, exclusion of some interest and penalty from the regulations e.g those arising from failure to pay VAT on time or file some returns may defeat the purpose of the regulations. For instance, some taxpayers may be unable to collect VAT from customers timely and end up paying unnecessary interest. From the Government perspective, the exclusion may affect voluntary disclosure of outstanding tax liabilities by taxpayers thus deny it tax revenue.
Also, the fact that decision made by the Commissioner General on remission is final i.e cannot be appealed is against the principle of fairness.
See the The Tax Administration (Remission of Interest and Penalties) Regulations, 2020 for details: