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Attitude of tax authority on Audits

id : 44   cat : Value Added Tax   
Hi every one... for those who have experienced KRA Audit...is KRA keen / aggressive on reverse VAT on imported services?
Asked by : Njenga Moses
 DOQ : 2016-06-16 21:00:00
   Njenga Moses

Answer

Reverse VAT : This is VAT payable on importation of services. In the next VAT period the same amount paid is then treated as input tax and recovered in full. However. If you are not registered no recovery is possible. This was declared by the importer using a form, VAT-7. Payment through a VAT-28 form would then be used to make payment (receipt of payment). With itax an e-slip is generated. to claim back the same tax earlier paid. This obviously was a NUISANCE tax to those who made taxable supplies as its effect was NEUTRAL. The catch is the 12 months max (for the repealed cap 476) period for claiming input tax. Once input VAT on imported services expires then the full impact of the reverse VAT is felt. Imported services by their nature apart from being expensive such as specialised engineering, IT, management consultants etc have an even DARKER side. WITHHOLDING TAX.!!! So by the time penalties & interest is calculated KRA would be smiling. The VAT Act 2013 came to the rescue of tax payers by scraping reverse VAT filing requirements. For those making at least 90% of sales as Taxable Supplies the filing requirements have been scraped all together.
Answered by : John Muiruri
 DOA : 2016-06-18
   John Muiruri
Comments
@ CPA John is KRA smart on this when carrying out checks ? though reverse VAT has an impact on cashflows
   Njenga Moses    Njenga Moses  2016-06-19 21:00:00
CPa John: The devil is in the detail.
   Lynette Odongo    Lynette Odongo  2016-06-20 21:00:00


Other Answers



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My friend I have had three in-depth audits and two compliance audits. The officers try to intimidate you,but most do not know the tax law in depth so be very careful with what you say to them. Say less. Most of the time. they may not pick up things you know they would not have missed. They always assume you are hiding something.consult before peers here before you accept a mistake
 votesDOWN : 0    votesUP : 0
: Phoebe Wakhungu  DOA   2016-06-16 21:00:00

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