Kenya Revenue Authority (KRA) has introduced a new tool into its iTax system– the Value Added Tax (VAT) special table – which targets non-compliant taxpayers.  

The VAT special table is a tool that will be used by the taxman to spotlight non-compliant taxpayers until they regularise their tax obligations.

For instance, when a taxpayer files returns but does not pay their taxes, they are listed on the table until they start paying their taxes.

This is detrimental to business since it affects the image of the company, limiting it from new opportunities while straining the existing ones.  

In this regard, KRA highlights instances where a business may be listed on the VAT special table.  

Debt recovery efforts  

Payment Returns without payments (PRWP), which occurs when taxpayers file for returns without necessarily making any payments for a period of six consecutive months, even after debt recovery efforts.   

However, exceptions are made to those taxpayers who have a payment plan or partial Payments.  

The second batch of taxpayers eligible for the table are the TIMS/eTIMS non-compliant. Traders which involve taxpayers who have not transitioned to the much easier eTIMS solution introduced in 2020.

eTIMS involves a software installed in the taxpayer’s phone or computer, essentially easing the tax-paying process.  

“The nontax filers who have not filed any tax in the past six months or more are also going to be put on the list,” KRA says.  

The third category, according to the taxman, is the one for Nil-Filers with Input Tax Claims. These, KRA adds, are traders who file nil returns for six months or more but claim input tax using their PIN.   

However, this does not include traders who file nil returns for six months or more and have no input tax.  

The last batch of taxpayers to be put in this list are the missing traders who commit VAT fraud by claiming false input tax or using false credit notes.  

At the same time, the table has some benefits to taxpayers and the tax system, like minimising fraud by reducing PIN misuse.   

The revenue authority added that the table “helps correct VAT obligations that are no longer applicable.”  

It noted that a message will be sent to the taxpayer in itax, saying “This PIN is currently under review for VAT compliance irregularities. Please contact your respective KRA Tax Service Office (TSO).”  

In the event that one cannot file a tax return because of being flagged, the authority will address the matter “administratively.”   

Your suppliers and trading partners will not be able to claim input VAT using your PIN until the issues are resolved. However, KRA provides some exceptions.

“If you are flagged as a PRWP but actually declared the transaction in your VAT return, your trading partner can still apply to their TSO to have their input VAT claim approved, provided proper documentation is submitted as required under Section 17(2) of the VAT Act, 2013,” KRA stated.