Businesses that had been blacklisted for failing the tax compliance test have a chance resume their normal operations after Kenya Revenue Authority (KRA) asked them to visit its offices with proof they had settled the levies before they can be removed from the exclude list.
The businesses in question are those that had been flagged under the VAT Special Table, which have now been provided with an opportunity to regain compliance after KRA outlined a step-by-step guide to achieve it.
The VAT Special Table is an operational tool used by KRA to classify VAT-registered taxpayers with inconsistencies in compliance. Once in the special table, a taxpayer is restricted from conducting certain processes in their profile.
Some of the activities that can land business owners in this dreaded table are: issuing fictitious tax invoices, engaging in missing trader schemes, not remitting VAT collected from clients, and claiming VAT input from non-existent or invalid suppliers.
KRA came up with the VAT Special Table to combat fraud and boost revenue collection.
Many businesses have found themselves unexpectedly blacklisted making it impossible for them to file VAT returns or claim tax deductions.
This, in turn, cripples their businesses, those blacklisted are unable to file VAT returns, comply with VAT regulations, and in extreme cases face heavy penalties and interests charged for non-filing of VAT.
However, there is hope, as KRA has outlined a step-by-step guideline on how to avoid and get off the table and resume normal operations.
Business owners flagged in the table have been directed to visit the nearest KRA Tax Service office for help and removal from the table. One must present documentation proving they have complied and qualified for removal from the blacklist.
Proof that you have TIMs (tax invoicing machine), financial statements for the last 12 months, sample receipts or business contracts, updated business contact information (address, phone, email), and tax compliance certificates for all company directors.
Others are the business license/permit, current company registration document (CR12 form), copies of directors' IDs or passports, and a certificate of Incorporation (company registration certificate).
KRA also warned traders to check that they are dealing with blacklisted suppliers which results in blocked VAT claims and unexpected financial penalties.
Business owners have been advised to regularly audit their VAT compliance, ensure tax payments are up to date, and verify that suppliers are tax-compliant. This proactive approach will keep them from being flagged in the first place.
