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In a move aimed at tightening compliance and reducing tax fraud, the Kenya Revenue Authority (KRA) has rolled out a new enforcement tool dubbed the VAT Special Table, integrated into the iTax system.
This digital mechanism targets non-compliant VAT-registered taxpayers by restricting their ability to file returns until they regularise their tax affairs.
The VAT Special Table is part of KRA’s effort to enhance efficiency, transparency, and accountability in tax administration, especially within the VAT framework.
KRA headquarters at Times Tower, Nairobi
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Who Is Affected?
KRA has outlined five key taxpayer categories that risk being flagged and added to the VAT Special Table:
Payment Returns Without Payments (PRWPs): These are taxpayers who file VAT returns consistently for six months or more without making actual payments, and who have not committed to a payment plan.
TIMS/eTIMS Non-Compliant Traders: Businesses that have failed to transition to the Tax Invoice Management System (TIMS) or its electronic version (eTIMS), as required under the VAT (Electronic Tax Invoice) Regulations, 2020.
Non-Filers: Entities that have not submitted any VAT returns for six months or more.
Nil-Filers with Input Tax Claims: These are traders who file nil returns for extended periods but whose PINs are still used to claim input VAT, an indicator of possible fraud.
KRA staff working on their desks.
Missing Traders: Fraudulent entities engaging in practices such as claiming fictitious input tax or using fake credit notes to manipulate VAT obligations.
Why It Matters
The VAT Special Table serves both as a preventive and corrective tool. According to KRA, the new tool with help:
Reduces PIN Misuse: Helps curb fraudulent claims and fictitious transactions using other traders' PINs.
Encourages Clean Trade: Businesses are prompted to vet their suppliers more rigorously to avoid risks.
Corrects Obsolete Obligations: Enables removal of VAT obligations for businesses that no longer qualify for VAT registration.
A KRA field officer serving a client
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What Happens If You’re Flagged?
If a taxpayer is listed on the VAT Special Table, several implications follow:
Return Filing is Blocked: Attempting to file a VAT return will prompt a system alert: “This PIN is currently under review for VAT compliance irregularities. Please contact your respective KRA Tax Service Office (TSO).”
Input VAT Claims Are Blocked: Your suppliers and partners will not be able to claim input tax using your PIN, potentially disrupting business transactions.
Penalties Managed Internally: Any penalties accrued during the flagged period will be reviewed and administered by KRA directly.
Limited Exceptions Exist: For instance, if you were flagged as a person or business which files taxes but doesn’t pay, and you can prove the transaction was declared, your trading partner may still have their input VAT claim approved after submitting proper documentation to the tax service officer.
TIMS/eTIMS Compliance Is Mandatory: Taxpayers flagged due to non-compliance with TIMS or eTIMS must visit their tax service officer for onboarding.
Kenya Revenue Authority (KRA) Commissioner General Humphrey Wattanga during a press conference
What Should You Do If Flagged?
Taxpayers whose PINs are added to the VAT Special Table are advised to take the following immediate action:
Contact Your TSO: Engage your Tax Service Office for guidance on the necessary steps to resolve the compliance issue.
Settle Outstanding Obligations: File overdue returns, pay pending taxes, and ensure full migration to eTIMS.
Maintain Proper Records: Be ready to provide documentation in support of genuine transactions linked to your VAT filings.
The VAT Special Table comes amid heightened pressure on KRA to improve revenue collection and combat systemic tax evasion.
With Kenya’s public debt and budget deficit concerns mounting, tools like this play a critical role in sealing revenue leaks.
Businesses are expected to audit their VAT compliance status and ensure full eTIMS integration because being listed on the Special Table not only disrupts operations but may also harm business reputation.