What does a taxpayer require to apply for addition of VAT obligation?

KRA has restricted the addition of VAT obligation and set the following conditions and mandatory documentary requirements for approval of the same;

  1. Original CR12 for companies and Identity documents for directors or individuals including National Identity cards, passports or Alien Identity Cards;
  2. Business permit from relevant bodies;
  3. Work permits for aliens;
  4. Tax Compliance Certificates for all directors;
  5. Letter of appointment of Tax Representative for non-resident companies and identity documents of directors for companies with non-resident directors;
  6. Contact details including physical address, verified telephone contacts, email addresses, utility meter numbers and documents, office rent agreements;
  7. The website(s) or uniform resource locators (URLs) of the supplier through which business is conducted, where applicable;
  8. Contract agreements and/or sample invoices;

 A Taxpayer who meets the above requirements can proceed to make an application for addition of VAT obligation.


What is VAT Special Table?

It is a mechanism implemented in iTax to enhance VAT compliance where certain categories of VAT registered taxpayers are restricted from performing certain processes. The following are categories so far on boarded on the special table:

Nil filers and Non-filers – This refers to Taxpayers who have either not filed returns or have consecutively filed NIL returns for a specified period. Missing Traders – This refers to taxpayers who are filing and paying VAT but on investigation were found to be involved in VAT fraud relating to ‘missing trader’ schemes  

As an individual/organization should I pay VAT and income tax as well?

Income tax is a compulsory tax obligation whereas, for VAT, you pay for it when you are registered with VAT.

What are the benefits of the VAT Special Table?

The VAT special table bears the following benefits for traders:

  1. Identify erroneously added VAT obligations or VAT obligations that are no longer required.
  2. Reduces cases of abuse of traders PIN by fraudulent persons
  3. Assist traders to conduct business with compliant suppliers

What happens when a Taxpayer is on-boarded on the VAT Special Table?

  1. The taxpayer on-boarded on the VAT Special Table will be restricted from filling VAT returns. Upon attempting to file the return, the system will display the message: “This PIN is currently under review for VAT compliance irregularities. Please contact nearest KRA office.”

Note : Penalties will not be charged for non-filling of VAT returns as a result of on boarding of a taxpayer on the VAT special table.

  1. Traders cannot claim input tax from taxpayers’ on boarded on the special table. Upon upload of an original or amended VAT return that contains the PIN of a taxpayer who is in the special table, the entry will be rejected by the system and the following message displayed: “This PIN is not liable to input tax deduction”.

The affected taxpayers will be required to contact their Tax Service Office for guidance on removal from the VAT Special Table.


How do I calculate VAT

VAT operates on an Input - Output Principle. A registered person should maintain a record of his sales and purchases for a tax period.

Input tax refers to VAT charged on purchases of taxable purchases and expenses for business purposes.

Output tax refers to the VAT charged on the sales of taxable goods or services.

Tax payable is the difference between the Output tax and the Input tax.

Output Tax - Input Tax = VAT Payable

 If positive, tax due is payable on or before the 20th of the following month.