The Kenya Revenue Authority (KRA) said it will crackdown on firms with consistently missing Valued Added Tax (VAT) returns as part of a taxpayer register clean up exercise.
The taxman says VAT taxpayers who have never submitted a VAT return or who have consistently filed nil returns will not be allowed to file new or amended VAT returns.
Further, the taxpayers’ PINs will not be accepted for VAT input claims by other taxpayers even as the taxman permits the taxpayers to settle any pending VAT liabilities.
“A significant number of taxpayers with VAT obligations exist in the taxpayer register but are either not filing their monthly VAT returns or consistently file nil VAT returns,” KRA said in an internal memo to staff dated August 5.
“The reasons identified for the huge number of nil and non-filers include erroneous VAT obligations, inactive/dormant taxpayers and closed down companies. The existence of this nil and non-filers poses a challenge of monitoring the taxpayers’ compliance effectively.”
Among the strategies deployed include deregistration of erroneous VAT obligation and validation of new VAT entrants being on-boarded to the tax register.
Any person, individual, company or partnership that has supplied or expect to supply taxable goods worth Ksh.500,000 and above within 12 months must register for VAT.
VAT returns are submitted monthly via iTax on or before the 20th day of the following month.
Persons with no VAT submit a NIL return.
The late payment of VAT attracts a penalty of five per cent of the tax due and a late payment interest of one per cent per month on the unpaid tax until the tax is paid in full.
The late filing of returns meanwhile attracts a penalty of Ksh.10.000 or five per cent of the tax due, whichever higher.