VAT Module 10 (b) VAT Administration and Compliance ©Dr. Wakaguyu wa-Kiburi (www.taxkenya.com) 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Scope Tax as a Debt of State; Extension of Time to Pay Tax; Priority of Tax; Order of Payment; Tax not Collectable; Late Payment Interest; Agency Notice; Objections; 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Scope cont’ Appeals; Settlement of Tax Disputes Out of Court and Tax Tribunal; General Provisions Relating to Objections and Appeals; Admissibility of Evidence. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Tax as a Debt of State Tax is a debt due to the government – civil debt. Tax is collected by the Commissioner. Tax payable electronically unless otherwise. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Extension of Time to Pay Tax A taxpayer can apply for extension of time to pay the VAT - in writing If satisfied, Commissioner will: Grant the application of extension. Determine the number of installment payments. Notification within 30 days of the application of the decisions 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Extension of Time to Pay Tax cont’ Note: In case the tax payment on installment is defaulted – the balance becomes due immediately. The taxpayer is still liable for late payment interest from the original due date 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Priority of Tax Net tax due and 2) Withholding tax Incase of liquidation or bankruptcy - tax is not part of the estate and shall be paid before any distribution of property. In case of withholding tax: Not subject to attachment - debt or liability of the person – banks. First charge on payment/amount – from tax withheld or deducted. Deducted before any other deductions. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Order of Tax Payment When less tax is paid – order is as follows: Tax liability Penalties Interest In case the person has more than one tax to pay, order is as the tax liabilities arose (???) In case there is interest – should not exceed the principal liability. (provide security for tax??) 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Tax Not Collectable Relief because of doubt or difficult to recover where it is a) Impossible to recover b) Due difficult or expense c) Hardship or inequity Commissioner writes to the CS who will a) determine case b) direct for court action. The tax will be deemed as extinguished, abandoned or remitted. This will depend on each case. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Late Payment Interest Failure to pay tax on or before due date attracts late payment interest at 1 % per month or part of a month. If the principal tax amount was not payable, the respective interest is refundable. Computed as simple interests (??). Computed in addition to late payment penalty Treated as tax payable. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Late Payment Interest cont’ When a person pays all outstanding tax in full, interest does not accrue between date of notification and payment. The accrued late payment interest shall not exceed the principal tax liability. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Agency Notice When tax remains unpaid. There are grounds to believe that the taxpayer will not pay the tax by the due date. Notice done in writing to persons who Owe or will owe the taxpayer. Holds or will hold money on account of some other person for payment to taxpayer. Has authority from some other person to pay money to the taxpayer. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Agency Notice cont’ Amount to be paid is equal to unpaid taxes or amount Commissioner believes will not be paid by due date. If agency notice is in regard to employment income – not more than 20 % of the income. Note - Read rest of the section- 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Objections Dispute of tax decisions are first made under Section 51. – for a valid notice Notice of objection in writing Lodged 30 days after notification of the decisions… notice valid if: Has reference States grounds for the objection Amendments required to correct the decision Reasons for the amendments. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Objections cont’ For an assessments – entire amount not in dispute paid or agreement on how to pay. If notice is not validly lodged, the taxpayer should be notified immediately. Objection to original assessments are only to alterations and additions. Taxpayer can apply for extension of time to lodge notice of objection. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Objections cont’ Application for extension can be allowed if taxpayer: Was not in Kenya, sick or other reasonable causes. Did not unreasonably delay the notice. If the notice was validly lodged within time, the Commissioner shall decide whether to allow all or part – called objection decision 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Objection cont’ Taxpayer is notified of the objection decision in writing – and include statements of findings on the material facts and the reasons for the decisions, amendments etc. Note: Where the Commissioner has not made an objection decision within Sixty Days from the date the taxpayers lodged the notice of objection, the objection shall be allowed. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Appeals If a taxpayer is not satisfied with an appealable decision, they appeal to the Tax Tribunal in accordance with the Tax Appeals Tribunal Act, 2013. Notice of appeal is only valid if the taxpayer: Has paid the tax not in dispute or Entered into an arrangement with the Commissioner to pay the tax not in dispute. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

a. Appeals to the High Court If a taxpayer is not satisfied with the decision of the Tax Tribunal, they may : Within 30 days of notification of the decision by Tribunal or Within such period that the High Court may allow. Appeal the decision to the High Court. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

b. Appeals to Court of Appeal A taxpayer that is not satisfied with the decision of the High Court may: Within 30 days of notification of the decision by Tax Tribunal or Within such period that the Court of Appeal may allow. Appeal the decision to the Court of Appeal Where else to go? 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Settlement of Dispute Out of Court or Tribunal Parties can ask the Court or the Tribunal to settle the case out of Court or the Tribunal. The settlement shall be made within 90 days from the date the Court or the Tribunal permits the settlement. If this does not happen, the dispute is referred back to the Court or the Tribunal that permitted the settlement. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

General Provisions Relating to Objections and Appeals The burden is on the taxpayer to prove that the tax decision is incorrect (Justice Odunga’s ruling 2018??). Appeals are only on question of law. Original objection grounds will be the basis for any appeal to the Tribunal, High Court or Court of Appeal unless the taxpayer is allowed to add new grounds. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Admissibility of Evidence A document or copy of or extract from a document obtained by an authorized tax officer or A statement made by/to an authorized officer in accordance with the Act. …… shall if relevant be admissible in civil or criminal proceedings under the Act to which that person is party. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Q & A 1. 2. 3. 4. 5. 8/27/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi