Tax Offenses and Penalties

All registered taxpayers are required by Law to adhere to the above-mentioned obligations but as a measure to enforce and enhance compliance, the VAT Act spells out certain offenses and respective penalties.

These include: –

  1. Failure to register – fine not exceeding Kshs.20, 000 or imprisonment for a term not exceeding six months or both
  2. Enforced registration – default penalty of Kshs.100, 000
  3. Failure to submit a return on or before the due date or submitting a payment return without paying the tax due – default penalty of Kshs.10, 000 or five percent of the tax due whichever is the higher and additional interest of 2% per month compounded.
  4. Failure to keep proper records – a default penalty of between Kshs.10, 000 to Kshs.200, 000

5 Fraudulent Accounting – a fine not exceeding Kshs.400, 000 or double the tax evaded whichever is greater or imprisonment for a term not exceeding three (3) years or both.

  1. Failure to issue a Tax Invoice – an automatic penalty of not less than Kshs.10, 000 but not exceeding Kshs.100000/=.
  2. Hindrance or obstruction of authorized officers
  3. Uttering false statements
  4. Charging tax when not registered – tax shown on such invoice is due to the Commissioner within seven (7) days.
  5. Failure to display a certificate of registration – a default penalty of Kshs.20, 000 and a fine not exceeding Kshs.200, 000 or imprisonment for a term not exceeding two (2) years or both.
  6. Failure to comply with VAT regulations
  7. Failure to pay tax and late payment

Note:

For offenses, which no specific penalty is provided, a general penalty of a fine not is exceeding Kshs.500, 000 or imprisonment for a term not exceeding three (3) years or to both is applicable.

 

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