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


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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