Comments to answers

I was asked by a person who is running a small-scale business. The turnover is approximately Kshs. 2 Million a year. This would be so if by any chance he gets a contract with a big firm. Of course getting such contracts for a small business person is a herculean task in Kenya we live today.

Most of the people he works for are medium companies and his services are vatable. This person is not registered for VAT.

He asked me whether it is compulsory for him to register for VAT.

For once, I do not have an answer for this. I don't know whether whatever answer will come from my mouth will either land him in future problems with the taxman as I have seen some do lately.

But if I may ask, what does KRA consider to be the minimum threshold for compulsory VAT Registration.

Hi Kimani.

VAT registration is done through ticking the VAT obligation on PIN form in the itax platform

Registration is mandatory for any person who has supplied taxable goods or services or expects to supply taxable goods whose value is more than KShs 5,000,000 within twelve months.

Registration should be done within 30 days from the date on which he becomes a taxable person.

Voluntary registration granted at Commissioner's discretion.

Penalties
Failure to register attracts a hefty penalty of 100,000/- per month upto a maximum 1million.

Given the scenario above your client does not fall within the threshold. Hence no requirement to register for VAT.

Are you sure about this because KRA is saying something different.