Over 66,000 accounts have been delisted by the Kenya Revenue Authority (KRA) for defaulting on their Value Added Tax (VAT) obligations in a move to stifle tax evaders.
According to a statement released by KRA, the affected accounts are mainly Personal Identification Numbers (PINs) belonging to individuals and businesses who have VAT obligations but still fail to file nil returns.
“The VAT obligations of 66,269 taxpayers will be deregistered or canceled effective June 10, 2021,” KRA’s Commissioner in charge of domestic taxes, Rispah Simiyu, said in a statement.
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VAT is a tax charged by the KRA on the supply of taxable goods or services made or provided in Kenya and on the importation of taxable goods or services into the country.
The announcement follows an earlier warning in early May issued by KRA urging taxpayers to file their returns by June 3 or have their PINs deregistered, a move necessitated by its endeavor to smoke out businesses and high-net-worth individuals that owe the taxman close to 250 billion shillings.
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The deactivation of KRA PINs will hinder the affected businesses and persons from accessing or making critical transactions that require taxpayer proof. Such transactions include land purchases, real property, and other development plans, vehicle registration, transfer, or licensing as well as the registration of business names and companies, among others.
“Please be advised that all the taxpayers whose VAT obligations will be deregistered/canceled shall be relieved of the duty to charge VAT on their supplies and accordingly, any input VAT claimed from supplies made by the deregistered taxpayers will not be allowed,” read Mrs. Simiyu.
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She, however, added that the deregistered taxpayers will remain liable for any acts done or omitted while they were registered for VAT obligation.
“Taxpayers whose VAT obligations are canceled are reminded that charging VAT without an active VAT registration is an offense,” the KRA added.
To reactivate the VAT obligation, those delisted by the KRA will be required to provide valid and detailed reasons to their Tax Office Service on why the process should be reversed, among other requirements.
After the renewal, the taxpayer will be obligated to file all the missing VAT returns to date or make amendments to the previously filed nil returns to reflect the accurate tax status.