Tax Alert - Filing of VAT Returns and Invalid Tax Invoices

Kenya Revenue Authority (KRA) published a “Public Notice” on filing of VAT returns and claiming of inputs using invalid tax invoices on 16th and 17th February 2017.

KRA stated that they validated all invoices credited in the VAT returns of taxpayers from July 2016. According to the Notice, all invalid invoices not recognized by iTAX system will automatically be disallowed.

Taxpayers were advised to visit the KRA website to check whether they were affected by the validation and amend their returns to avoid tax penalties.

Invalid Input Invoices

The iTAX system is able to match and validate input VAT claimed by purchases against output VAT declared by sellers.

Input invoices are invalidated in the following circumstances:

1. A purchaser claims input tax on an improper tax invoice;

2. A purchaser claims input VAT on an invoice that is not declared by the seller;

3. The details of the invoice declared by the purchaser do not match the details declared by the seller, namely;

• Type of purchase;
• PIN of the seller/ Custom Entry Number;
• Name of Supplier;
• Invoice Date;
• Invoice Number;
• Description of goods; and
• Taxable Value.  

Our recommendations

We recommend that taxpayers should visit the KRA website to check whether their PINs are affected by the validation. Download KRA List

Going forward we recommend that taxpayers should take care to claim input VAT on proper tax invoices. Proper tax invoices are generated through Electronic Tax Register (ETR) or Electronic Signature Device (ESD).

Taxpayers should also enter the correct details of the tax invoices on which input VAT is claimed.

Contact us for assistance:-

East African Tax Consulting

Tel. +254 722 332729
Email: advisor@taxeac.com

Website: www.taxeac.com



East African Tax Consulting is an Associate of Muthomi & Karanja Advocates.