By CPA Mutitu Dennis

KRA Strategies for Enhancing Tax Compliance and Revenue Collection

The Kenya Revenue Authority ensures the collection of revenue from taxes used to facilitate various government projects. However, in the recent past, given the decline in the economy, several taxpayers have failed to remit their taxes in time, while others declare less taxes. This is mainly to ensure they have sufficient funds for business operations and sometimes business expansion. The Kenya Revenue Authority has developed various strategies to ensure tax compliance and maximize revenue collection. One significant way is the effecting of the special table strategy, e.g., the VAT special table. 

VAT Special Table

The VAT special table is a strategy implemented by the Kenya Revenue Authority in iTax to boost VAT compliance. Under it, some categories of taxpayers registered for VAT are restricted from conducting certain processes. 

VAT special table is a significant concern since some taxpayers fail to understand why they would be restricted from filing some aspects of their return while concerned about the interests and penalties from the unpaid and undeclared tax. 

Categories On Boarded on The VAT Special Table

Therefore, it is vital to understand the various categories on-boarded on the special table:

1. Missing traders

This involves the taxpayers who file and pay VAT but are under investigation or during a KRA audit, were found to be involved in using fictitious credit notes, VAT fraud relating to claiming of fictitious tax inputs

• Non-filers

This involves taxpayers who have not filed their returns for at least six (6) months or more.

• Payment returns without payments (PRWPs)

This category entails taxpayers who have taken the initiative to file their taxes and have not made any payments for six (6) months. The tax officer has made all the efforts to ensure collection of the debt via the stipulated debt collection and/or enforcement strategies, or the taxpayer cannot be located/ traced. However, it is vital to note that there will be exemptions for taxpayers who have negotiated and entered into a payment plan for the tax due or have made part payments of the tax due.  

• Nill filers

This category comprises taxpayers who have filed nil returns for 6 months or more while having input tax claims made against them. Additionally, it is vital to note that this does not entail taxpayers who are filing nil returns with no input tax claims against them. 

• Traders who are non-compliant with TIMS/Etims

This category involves all taxpayers with VAT obligations who have not complied with the Valued Tax, Electronic Tax Invoice Regulations of 2020, which requires taxpayers to transition from ETR to TIMS/Etims. 

Effects On Taxpayers Added into VAT Special Table

The following are the implications for the taxpayers who are added into VAT special table:

The traders whose Personal Identification numbers – PINs have been placed in the special table as a result of non-compliance with transitioning to eTIMS/TIMs must visit their TSO so as to on-board to eTIMS.

This category involves all taxpayers with VAT obligations who have not complied with the Valued Tax, Electronic Tax Invoice Regulations of 2020, which requires taxpayers to transition from ETR to TIMS/Etims. 

• Traders cannot claim tax input from taxpayers in the special table. The system is designed to reject an uploaded amended or original VAT return containing the PIN of the taxpayers in the special table and the following message will be displayed: “This PIN is not eligible to input tax deduction.”
• The enhancements in the KRA system were designed to ensure that claims from non-files and nil filers are blocked for VAT as well as protected from lists of the various suspected traders who are missing as a result of previous conducted audits and received intelligence.
• Any taxpayer added to the VAT special table shall be constrained from filing VAT returns. When one attempts to file the return, the system will automatically display: “This PIN is currently under review for VAT compliance irregularities. Please contact your respective Kenya Revenue Authority (KRA) Tax Service office (TSO).”
• Not withstanding (2) above, in the case of a supplier placed on the special table for being a Payment returns without payments (PRWPs), but have clearly declared the sale in their VAT return for traders with disallowed VAT input, the trader can issue an application to their TSO, Tax Service Office, to have the tax input disallowed as long as they can support it as provided for in Section 17(2) of the VAT Act, 2013.
• In the case of a supplier placed on the special table for being a Payment returns without payments (PRWPs), but have clearly declared the sale in their VAT return for traders with disallowed VAT input, the trader can issue an application to their TSO, Tax Service Office, to have the tax input disallowed as long as they can support it as provided for in Section 17(2) of the VAT Act, 2013.

Benefits Of the VAT Special Table

The following are some of the benefits of VAT special table to taxpayers and KRA:

1. VAT special table enables traders to do business with compliant suppliers
2. It helps in the identification of VAT obligations that have been added erroneously and are not required anymore.
3. It helps in reducing instances of abuse of traders’ PIN by fraudulent individuals.

How Can I Be Removed from VAT Special Table?

Any taxpayer onboarded onto the special table is required to contact their TSO, Tax Service Office, for comprehensive guidance on removal from VAT special Table. Also, you can engage your tax consultant to ensure you get all the professional help you need.

Documents required to ensure removal from VAT special table:

1. Proof of TIMs onboarding
2. Bank statement for the past 1 year
3. Sample invoices or contract agreements
4. Updated contact details including physical address, verified telephone contacts and email address
5. Valid tax compliance certificate for all directors
6. Business permit form
7. Current business CR12
8. Details of the directors, e.g., national identification cards or passports
9. Certificate of Incorporation

Remember: Proactive engagement with KRA ensures smooth compliance.

CPA Mutitu Dennis Is a Tax Expert at Dennykins and Associates. He is a member of Public Finance and Tax. https://dennykinsassociates.com

denom39@gmail.com