VAT Module 10 (a) VAT Administration and Compliance ©Dr. Wakaguyu wa-Kiburi (www.taxkenya.com) 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Scope VAT Payments; VAT Penalties; Burden of Proof; Tax Assessments; Notification of Amendments. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi VAT Payments For debit returns, payment slip generated from i-tax. Taxpayer selects mode of payment – cheque, cash etc. Taxpayer selects any of the appointed commercial banks. Payment can also be made through electronic funds transfers. Payment is less any credits e.g. Withholding VAT or credit carried forward. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi VAT Penalties Returns must be submitted by 20th day and if the day is on a holiday or weekend, it is the last working day. Failure to submit the returns - fine of kshs 10,000. For a debit return - penalty of kshs 20,000 or 5 % whichever is higher ?? A further 1 % per month interest tax is levied on any amount of tax that remains unpaid. Note maximum penalties and interests is 100% of the principal tax since 2010. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi VAT Penalties cont’ From 2017, any penalties and interest that remains unpaid become due and payable. General penalty – if a person is convicted of an offence for which no penalty is provided there is a penalty fine not exceeding kshs 1 million, an imprisonment not exceeding 3 years or both. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Burden of Proof In any civil proceedings the burden of proof is on taxpayer that: Any tax has been paid. Services are exempt from tax. It is the person who: is Liable to pay tax or Claiming that tax has been paid or Claiming that the goods or services are exempt from payment of tax. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Tax Assessments Self-Assessments Default assessments Advance assessments Amended advance assessment Amended assessments of the original assessments Amended assessment of the amended assessments 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Self - assessments A self-assessment return is the basis for the tax payable for the reporting period – VAT 3. Includes debit, credit and nil amounts. A tax return is a self assessment return despite the form containing: Pre-entered information by Commissioner Tax payable - computed electronically as the information is being entered into the form, 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Default Assessment When a taxpayer fails to make a tax return. Made by the Commissioner based on available information on: Excess input tax carried forward. Tax (including nil amount) payable by the taxpayer for the period. The Commissioner will notify and specify: Amount assessed as tax or input tax carried forward. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Default Assessment cont’ Amount assessed as late filing penalty and any late payment penalty payable in respect of the tax or excess input tax assessed. Late payment interest payable. The tax period assessment relates to Due date for the payments. Not less than 30 days from the date of service of the notice. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Default Assessment cont’ Manner of objecting to the assessment. Note: notification does not alter the original due date for the tax, any late payment or late payments payable as provided under the law. Assessment shall not be made after 5 years from last date of the reporting period. The 5 year period does not cover gross or willful neglect, tax evasion or fraud by the taxpayer. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Advance Assessment Assessment made by the Commissioner before due date but in accordance with the law. .. Done before date of return … Why? Taxpayer notified in writing and specifications: Amount of tax assessed and any penalty due Tax period Tax and penalty due dates. How to object the assessment. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Amended Advance Assessment An advance assessment may be amended to allow assessment for the whole tax period. The taxpayer is required to make a tax return for the period despite the advance assessment. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Amended Assessment Amendment of all original assessments by Commissioner and taxpayer. By Commissioner:- making alterations or additions from available information … to ensure that taxpayer is: Assessed in respect of correct input tax carried forward. Liable for correct amount of tax in tax period. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi Amended Assessment By taxpayer on a self-assessment within 5 years from date of filing the return - application. The Commissioner may: Amend the self-assessment. Refuse the application. The Commissioner must notify the decision within 30 days of receiving the application. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Amendment of Assessments The Commissioner may amend the assessment In case of gross or willful neglect, evasion or fraud by or on behalf of the taxpayer at any time. In other cases within five years - For self-assessment since the date the self assessment was made. Any other assessments - the date the Commissioner notified the taxpayer of the assessment. The Commissioner may also amend the self -assessment if it was submitted within 5 years 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Amendment of Amended Assessments The Commissioner may amend the original assessment 5 years after: Date taxpayer submitted the self-assessment return for the period. Date the Commissioner served the notice. One year after the Commissioner served the notice of the amended assessment - alterations or additions .. Note - whichever is later. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Notification of Amendments and Specification Assessed tax or excess input tax carried forward. Late payment penalty payable. Late payment interest payable. Tax period. Payment due date - tax, penalty and interest. Date not less than 30 days from the date the taxpayer received the notice. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi

Notification of Amendments and Specification g) How to object the assessment. Note: Despite any notification, The original due dates shall not be altered. Late payment penalty and interests remain payable based on original due date. 9/5/2019 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. 9/5/2019 Prepared for www.taxkenya.com by Dr. Wakaguyu wa-Kiburi