Kenya is a growing economy and one of the top investment hubs in Africa. As the economy diversifies, the Kenya Revenue Authority has changed the tax laws considerably to accommodate emerging tax needs and enhance revenue collection. The changing tax environment has introduced new challenges to taxpayers of all sizes, including individuals and businesses. Keeping up with new tax regulations and compliance requirements is not easy. It requires professional tax help, either through KRA tax agents or tax consultants. Most taxpayers are confused when choosing the right tax professional for their tax needs. This KRA tax agent vs. tax consultant comparison breaks down the differences between the two professionals to help you choose the best one for your tax needs.
Who is a KRA Tax Agent?
A KRA tax agent is a legal professional licensed by the KRA Commissioner to handle a taxpayer’s tax matters. Their position is legal and established under the Tax Procedures (Tax Agents) Regulations 2019. The registration and licensing of a KRA tax agent is a stringent process to ensure taxpayers work with qualified professionals. To be registered as a KRA tax agent, the applicant must:
- Apply in writing to the KRA commissioner.
- Pay a non-refundable registration fee of KSh. 20,000.
- Be tax compliant
- Be a member of ICPAK, advocate of the High Court of Kenya, and hold a practicing certificate.
- Be a former tax administrator with at least ten years of experience in tax administration.
- Be a holder of relevant qualifications and expertise recognized by the KRA Commissioner.
Roles of a KRA Agent
A KRA tax agent plays the following roles:
- Preparing and filing tax returns on behalf of the taxpayer.
- Writes formal notices and appeals to KRA and other tax authorities
- Handles all matters of tax compliance, such as VAT, PAYE, income, and excise taxes on behalf of the client.
- Represents the client during KRA tax audits, assessments, and tax disputes
- Advises taxpayers on matters related to tax planning, disputes, and savings strategies.
- Handle other tax matters on behalf of the client.
Licensed KRA tax agents in Kenya are legally recognized. They appear in an official list of registered KRA tax agents that’s publicly available.
Who is a Tax Consultant?
A tax consultant is a professional who offers accounting and financial services that help a taxpayer stay compliant. Their main focus is tax planning, management, and advisory. Most tax consultants are certified public accountants, regulated by ICPAK. Not all tax consultants are registered by KRA. Tax consultants cannot legally represent a taxpayer before KRA or any other tax authority, like the Tax Appeals Tribunal.
Roles of a Tax Consultant
Here are the various roles of a tax consultant in Kenya:
- Offer tax advisory and planning to optimize tax strategies.
- Review taxes and calculations to ensure the taxpayer is doing their taxes correctly.
- Help the taxpayer identify potential risks and advise on the best way forward.
- Assist in tax preparation and filing returns.
- Help clients identify tax-saving opportunities.
- Assist taxpayers with overall tax compliance.
In a nutshell, a tax consultant offers tax advisory services for businesses and individuals.
Key Differences Between a KRA Tax Agent and a Tax Consultant
As we’ve identified so far, the roles of KRA tax agents and tax consultants overlap. However, distinct differences exist between the two, based on various aspects. These aspects include licensing, scope of services, regulation and oversight, and types of clients served. Let’s take a deeper look at these differences.
Licensing and Legal Recognition
A KRA tax agent is licensed by KRA and legally recognized under the Tax Procedures Act. On the other hand, a tax consultant is not necessarily approved by KRA. Instead, they are independent individuals or firms with qualifications in accountancy, tax advisory, among other relevant tax expertise.
Scope of Services
Another major difference between a KRA tax agent and a tax consultant in Kenya is in their distinct scope of work. KRA tax agents operate in a more legal framework, while tax consultants operate in an advisory capacity. For example, a tax agent can represent a client legally before KRA, TAT, and the High Court during tax disputes. A tax consultant can advise their client, but can’t represent them in legal tax proceedings.
Regulation and Oversight
A KRA tax agent is answerable to the KRA. If a tax agent fails in their capacity to represent clients and handle tax matters, their license can be revoked by KRA. On the other hand, a tax consultant isn’t regulated directly by any tax body. However, tax consultants are indirectly regulated by relevant bodies such as ICPAK and other consulting associations. As you can see, both KRA tax agents and tax consultants assist clients with taxes. The main difference lies in legal authority and scope of work.
KRA Tax Agent vs Tax Consultant: Which One Do You Need?
It can be confusing for a taxpayer to choose between a KRA tax agent and a tax consultant. Which one best suits our tax needs?
When To Hire a KRA Tax Agent
If your tax needs lean more into legal aspects and KRA representation services, you should consider a licensed KRA tax agent. Here are situations when you should hire a KRA tax agent:
- KRA tax audits and assessments
- Tax compliance support and filing tax returns
- Tax disputes with KRA
- Tax objections, appeals, and reviews
When To Hire a Tax Consultant
Tax consultants are essential, whether you are an individual taxpayer, a business, or a large corporation. They come in handy when you need solid tax advisory, management, and planning solutions.
Here are situations when you should hire a tax consultant:
- Review of tax calculations and compliance
- Tax advisory services such as strategic tax planning, tax saving, and minimizing liabilities
- Guidance on financial management and accountability
- Assistance with overall tax matters, including new laws and compliance support
Can You Work With Both?
Absolutely. A wise taxpayer works with both KRA tax agents and tax consultants to streamline their tax matters. You can work with both, depending on your particular tax needs. It’s even better when you find both in a firm. At Gichuri & Partners, we are both a licensed KRA tax agent and a tax consultant. When you work with us, you secure the best of both worlds, ensuring your tax matters are entirely catered for.
Whether you seek the best tax consultant services in Kenya or need a registered KRA tax agent for legal representation, you can find that in-house. Our team is here to provide compliance support, help plan your tax strategy, and ensure you save on your taxes. Contact us to get started.
Need professional help? Talk to Gichuri & Partners, tax consultants in Kenya.
