Traders who fail to make full and accurate disclosure of all taxable transactions including Value Added Tax (VAT) shall liable for prosecution, Commissioner for Domestic Taxes Ms. Elizabeth Meyo has warned.
The Commissioner said that Kenya Revenue Authority (KRA) had recently noted an emerging trend where VAT registered taxpayers are reducing their tax liability through falsified input VAT claims in contravention of the VAT Act, 2013 and the Tax Procedures Act. The Commissioner said that this is a tax crime.
“Registered VAT taxpayers are notified that falsified return declarations is a criminal offence and shall not be tolerated”, said the Commissioner.
To address this malpractice, KRA has put structures in place to mitigate and investigate the following VAT fraud incidences;
- Utilization of fictitious invoices.
- Claiming of input taxes from taxpayers not registered for VAT.
- Claiming of input taxes from taxpayers whose PINs are not migrated to the KRA iTax system.
- Claiming of input taxes by one or more taxpayers using the same invoice details.
- PIN theft and subsequent claiming of input taxes from taxpayers one has not traded with.
- Claiming of input taxes for amounts exceeding those transacted.
Going forward, KRA shall commence a review of input tax claims for various tax periods and will take action against any fraudulent cases, which will include disallowing and/or prosecution of the affected invoice claims.