In recent years, the Kenya Revenue Authority (KRA) has stepped up its tax compliance measures to combat fraud and boost revenue collection. One such initiative is the KRA VAT Special Table, a listing that strikes fear into many businesses—often with good reason. But what exactly is it, how does a business end up on it, and what can be done to avoid or get off it? This blog post will walk you through everything you need to know about the VAT Special Table: its purpose, implications, causes, and steps for removal.
What is the KRA VAT Special Table?
The KRA VAT Special Table is an internal compliance tool used by the Kenya Revenue Authority to list VAT-registered taxpayers suspected of fraudulent activities. These include:
- Issuing fictitious tax invoices.
- Engaging in missing trader schemes.
- Not remitting VAT collected from clients.
- Claiming VAT input from non-existent or invalid suppliers.
Being listed on the Special Table can have significant operational and reputational consequences for your business.
How Do You Know If You Are On the VAT Special Table?
There’s no formal public announcement made when a company is listed. However, signs that your business has been flagged include:
- Your clients are unable to claim input VAT from your invoices.
- You receive notices or queries from KRA regarding your returns or suppliers.
- An alert from the KRA iTax system stating that your PIN is under compliance review.
Why Does KRA Use the Special Table?
The VAT Special Table is part of KRA’s enforcement strategy under the VAT Act, 2013. It targets “missing trader” fraud, where companies issue or receive fake VAT invoices to inflate their input VAT and reduce their tax liability illegally. This tactic causes billions in lost revenue annually, prompting the KRA to tighten its audit and enforcement mechanisms.
Common Reasons for Getting Listed on the VAT Special Table
Understanding why businesses are flagged can help you avoid falling into the same trap. Common triggers include:
- Claiming input VAT from suppliers listed on the Special Table.
- Failure to file VAT returns or consistently filing nil returns.
- Mismatches between your declared output VAT and client feedback.
- Significant variance between declared purchases and sales.
- Being linked to a tax evasion ring or non-existent supplier networks.
Implications of Being on the VAT Special Table
If your business is listed, the consequences can be severe:
- Loss of Input VAT Claims: Your customers will not be able to claim VAT on your invoices.
- Audits and Investigations: You may be subject to a comprehensive VAT audit.
- Reputational Damage: Clients may stop doing business with you for compliance reasons.
- Legal Liability: KRA can pursue tax penalties, interest, and even prosecution.
How to Get Off the KRA VAT Special Table
Getting off the VAT Special Table requires proactive effort. Here’s what to do:
Engage a Tax Consultant or Lawyer : Work with a professional to help you navigate the process and communicate effectively with KRA.
Submit a Formal Request : Write a formal letter to KRA requesting removal from the Special Table, detailing your case and attaching supporting documents (e.g., proof of transactions, supplier contracts, delivery notes).
Provide Evidence of Compliance : You may need to demonstrate that your transactions are legitimate, and taxes have been properly accounted for.
Attend Compliance Interviews : KRA may invite you for a compliance interview. Be transparent and cooperative.
Amend VAT Returns if Necessary : If errors are found in past VAT returns, amend them via iTax to reflect accurate information.
Pay Outstanding Taxes and Penalties : KRA may require settlement of any outstanding tax liabilities before removal.
How to Avoid the VAT Special Table
Prevention is better than cure. Here are practical tips to stay compliant and avoid the Special Table:
- Conduct Due Diligence on Suppliers: Check their compliance status before claiming input VAT.
- File VAT Returns on Time: Avoid delays and ensure they are accurate.
- Maintain Proper Records: Keep invoices, delivery notes, and payment proofs.
- Use Registered ETR Devices: Only generate VAT invoices using approved systems.
- Engage a Certified Tax Agent: Regular health checks from professionals can help detect issues early.
What to Do If a Supplier is on the VAT Special Table
If you discover that a supplier is listed:
- Stop transacting with them immediately.
- Review all past invoices issued by them.
- Engage KRA to seek advice on how to rectify previous claims.
- Amend your returns if needed and provide explanations.
Conclusion
Being listed on the KRA VAT Special Table is not the end of your business but it is a serious red flag. It indicates that your VAT practices are under scrutiny and possibly non-compliant. The best course of action is to remain proactive: work with qualified tax experts, conduct supplier checks, maintain clean records, and stay updated on your VAT obligations. If you suspect your business has been listed or want to prevent that risk, Gichuri & Partners can help. We specialize in tax compliance, VAT health checks, and representing clients before the KRA.
