KRA blocks false VAT refunds

The Kenya Revenue Authority (KRA) has blocked the input VAT claims from suppliers who have not declared corresponding sales in their submissions.

The tax man says the automated disallowance of input VAT seeks to curb the application of refunds by taxpayers through fictitious invoices with the intention of evading taxes.

“The changes involve automated disallowance of input VAT at the time of filing returns from identified suppliers who have not declared corresponding sales for the inputs being claimed, with effect from the filing of August 1, 2013,” KRA said in a public notice on Tuesday.

“The affected taxpayers will be notified electronically of the input tax disallowed.”

KRA has further warned against tax evasion which invites fines of up to Ksh.10 million or double the tax avoided.

The changes in filing for VAT refunds comes as KRA crackdown on firms and individuals with persistent misses in filing VAT returns.

The tax man has been cleaning up its VAT register and has gone after VAT registered taxpayers who have never filed a return and those consistently filing nil returns.

“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.

Such taxpayers’ pins will not be accepted for input VAT claims.