Validation of VAT credits

Kenya Revenue Authority reminds all registered taxpayers that it is a requirement under the law to make full and accurate disclosures of all taxable transactions when filing their VAT returns. However, KRA has noted with concern, an emerging trend where VAT registered taxpayers are reducing their tax liability through false claims of VAT inputs which is in violation of the VAT Act, 2013 and the Tax procedures Act. This thereby denies the government significant revenue.

Registered VAT taxpayers are notified that failure to submit a correct declaration or falsifying information is a criminal offence. This includes;

• Utilization of import entry or purchase invoices more than once,

• Utilization of fictitious invoices

• Failure to observe the tax-point (Post-dating of sales invoices)

• Underdeclaration of outputs and/or overstatement of inputs

• Falsified credit notes,

• Claiming of withholding VAT credits without declaring the corresponding sales.

In view of this, all VAT credit claims are being subjected to a validation process and any inconsistencies are being disallowed. Where fraud has been detected, offenders shall be recommended for prosecution in accordance with the Tax Law.

Furthermore, taxpayers are advised to only claim valid inputs in their monthly VAT returns. Kenya Revenue Authority reminds all registered VAT taxpayers that it is a requirement under the tax laws for them to make a full and accurate disclosure of all their tax transactions when submitting returns or when called upon to do so.

Source: KRA public notices 17/2/2020

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