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The Kenya Revenue Authority (KRA) has deregistered 20,981 inactive taxpayers as part of sweeping reforms aimed at cleaning up the taxpayer registry and curbing VAT fraud.
This move is part of a broader compliance enforcement initiative under the VAT Special Table, a tool implemented within the iTax system to restrict non-compliant taxpayers and prevent input tax credit abuse.
In the same breath, KRA also flagged 7,719 suspected enablers of the “Missing Trader” scheme on the Special Table.
According to the taxman, this will restrict input tax claims from these entities and disrupt fraudulent chains.
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KRA staff working on their desks.
In May 2025, KRA recorded a 16% increase in Value Added Tax (VAT) collections, amounting to Sh32.141 billion, attributed to the rigorous compliance measures introduced in April.
The Large and Medium Taxpayers (LMT) Department reported a 13% growth, exceeding its target by over Sh1 billion, while the Micro and Small Taxpayers (MST) Department posted a 24% increase, surpassing its target by Sh110 million.
Other Key Measures Driving the VAT Compliance Boost
KRA outlined a comprehensive suite of ongoing and proposed actions that have helped close VAT loopholes and enhance accountability:
Stricter VAT Registration Controls
A multi-departmental VAT Task Force was set up to investigate fraud and recommend corrective actions.
VAT registration approvals have been centralised, reducing the number of authorising officers from 645 to 170 to limit abuse.
READ ALSO: KRA introduces changes to VAT return filing for businesses, individuals
Vetting and Physical Verification
New vetting panels have been introduced at all Tax Service Offices (TSOs), headed by Regional TBE leads.
In-person interviews and physical verification of applicants or agents are now mandatory before VAT obligations are granted.
KRA introduces changes to VAT return filing for businesses, individuals
Post-Registration Monitoring
Account Managers actively monitor eTIMS/TIMS invoice submissions, with inconsistencies triggering immediate investigations.
Revised documentation requirements include county licenses, permits, and proof of physical or digital operations.
System Upgrades and Interagency Integration
Ongoing iTax enhancements now include a VAT checklist, task separation for vetting and approval, and automatic rejection alerts.
Real-time business and director data validation through integration with government registries like the Business Registration Service and ID management systems.
Risk-Based Vetting and Inspections
Applications are now reviewed based on tax history, business activity, and vulnerability to fraud.
High-risk applicants and sectors face tighter scrutiny, including planned on-site inspections within the first year of VAT registration.
KRA headquarters at Times Tower, Nairobi
Enforcement via Suspension
Non-compliant cases face eTIMS suspension and are flagged on the VAT Special Table.
KRA is planning more physical site inspections, particularly targeting high-risk taxpayers.
Despite these efforts, KRA noted that only 22% of VAT-registered taxpayers currently bear the VAT burden, while 52% are credit filers and 26% file nil or zero returns.
KRA reaffirmed its commitment to strengthening VAT compliance through data-driven enforcement, stringent vetting, real-time monitoring, and system-backed accountability, ensuring that only legitimate, fully verified businesses are granted VAT status.