Wasike Lloyd
The Kenya Revenue Authority (KRA) has stepped up its checks on businesses applying for VAT registration. It says it found schemes in which some companies allegedly used VAT obligations to help other taxpayers avoid paying what they owe.
KRA Commissioner for Micro and Small Taxpayers George Obell spoke in Machakos at a Citizens’ Assembly, a forum where taxpayers, community members and other stakeholders share their experiences, views and suggestions on Kenya’s tax system. He said some businesses were applying for VAT registration not to meet their own tax duties but to enable arrangements that artificially cut other taxpayers’ VAT bills. These arrangements are widely known as “missing trader” schemes.
Obell said KRA has therefore added verification steps. Businesses seeking VAT obligations must now provide specific records and supporting documents to prove that their operations are genuine.
The stricter controls have, however, drawn complaints from legitimate businesses about delays in getting registered. KRA is now reviewing the process to make it easier for established firms while continuing to scrutinise suspicious applications.
The authority also said it is working more closely with other government agencies to fight tax evasion, especially in the alcohol and cigarette sectors. Illicit trade there has raised concern about lost revenue and risks to public health.
KRA Board Chairperson Ndiritu Muriithi said the authority is expanding taxpayer education to encourage voluntary compliance. He warned against filing nil returns while earning taxable income.
Muriithi said taxpayers must declare their earnings accurately. He said KRA wants to move from compliance driven by enforcement to a system in which businesses and individuals pay their taxes willingly.
