Married men, whose wives have not been paying income tax, run the risk of falling foul of the Kenyan law due to an antiquated regulation which places the responsibility of settling a woman’s tax liabilities on the husband unless she formally decides to do so.
Tax experts say the provision in Section 45 of the Income Tax Act, which dates back to the 1970s, is a relic of the past era when women were legally recognised as dependants of their husbands and is one of those earmarked for repeal during this year’s review of the tax law.
Viva Africa, a legal and tax consultancy, recently sent shivers down the spine of thousands of married men with the release of an advisory alerting them of the legal exposure.
Alice Owuor, the Kenya Revenue Authority (KRA) Commissioner, Domestic Taxes, described the provision as antiquated and inappropriate going by the present realities.
“It presupposes that the income of a married woman living with her husband is the income of the husband for purposes of ascertaining his total income, and is therefore assessed on that basis, and the tax thereon charged,” Ms Owuor said.
This means that the tax liability of a married woman (expressly living with her husband) is borne by the husband unless the woman opts to file a separate return.
Ms Owuor added that it is only in the case where the woman registers to file her own returns that her earnings shall not be deemed to be the income of the husband.
The decision of a wife to file her own returns is, however, optional, leaving men at the mercy of their spouses.
A wife’s tax liability, however, does not apply if the woman is not living with her husband, and is separated under a court order, a written agreement or are separated in such circumstances that the separation is likely to be permanent.
Income tax in Kenya covers a broad spectrum of earnings, including those from business, employment (including benefits), rent and investment. A man whose wife defaults on any of these is liable.
“Where any amount of tax remains unpaid after the due date, a penalty of 20 per cent shall immediately become due and payable,” the Income Tax Act says.
Ms Owuor did not, however, indicate whether the KRA has been enforcing this law nor the existence in the tax defaulters’ list of men who are facing tax liabilities for failing to account for their wives’ income.
Viva Africa Consulting said in the brief to its clients that where a married woman is employed, the risk is minimal as the onus to submit her taxes lies with her employer.
The problem, however, arises where the married woman is self-employed and/or earning professional income and does not pay taxes.