Introduction
Early this month, KRA deactivated more than 95,000 PINs concerning compliance issues related to VAT.
After deactivation PINs, KRA has come to the rescue of the deactivated persons by issuing PIN Reactivation Guidelines. We call it a rescue because after adhering to the VAT Act (2013) requirements, the affected taxpayers will be able to reactivate the PINs.
How to Reactivate the PINS
To reactivate the PINs, KRA has issued the following guidelines:
a) Use KRA PIN Checker to establish the status of the PIN. It is indicated whether the PIN is valid or suspended. Only those persons whose PINs are indicated suspended that need to act further. For the PIN Checker visit KRA website.
b) If the PIN is suspended, the person should contact the KRA to obtain the reasons for the deactivation. The taxpayer can do either of the following:
- Pay a visit to their tax station, which is their PIN base, the nearest KRA station or Service Centre.
- Call KRA Contact Centre on +254 (020) 4999 999 or +254 (020) 099 999.
- Log in to KRA website and download the PIN reactivation request form. The completed form should be emailed to pinreactivatio@kra.go.ke
PIN Reactivation Request Form
The PIN reactivation form is a request for general information. The details required are about the company, directors and the contact person in the company.
Company’s name, PIN, physical location, telephone numbers and emails address are required. Besides, the director’s details (names, PIN, telephone numbers and email addresses) are also wanted.
Further, the company’s contact person details such as name, telephone and email address are needed.
The Taxpayer
On receipt of the PIN reactivation form, the KRA will provide the reasons for the deactivation via the email provided by the taxpayer. The taxpayers will be expected to address all the non-compliance issues identified and communicated in the email properly or as advised by the station.
What does this mean?
The taxpayer is expected to address all the VAT non-compliance issues identified that resulted in the PIN deactivation. The communication from the KRA will address the following three reasons for the deactivation.
- A VAT-registered person who has never filed any VAT returns.
- Trading but PIN is not updated in i-Tax
- Supplying VAT-registered taxpayers but not registering for VAT obligation.
The following is an explanation of what to do.
What should the taxpayer do?
From the three reasons that have been advanced by the KRA as the main reasons for the deactivation, the taxpayer will be expected to do the following:
a) VAT registered person who has never filed any VAT returns
One of the registration requirements under the VAT Act (2013) is filing monthly VAT returns. This is irrespective of whether it is a nil, credit or debit return.
Failure to file the tax returns attracts a fine of kshs 10,000 or 5% of any tax due, whichever is higher per every return not filed on time.
Besides, there are penalties and interests for any tax that remains unpaid. Note that when penalties and interests remain unpaid, they become due tax.
The affected taxpayers will be expected to file all the pending VAT returns. Besides, the taxpayers will also be expected to pay fines for non-filing of tax returns. Further, the taxpayers will be expected to pay any penalties and interests.
b) Trading but PIN is not updated in i-Tax
KRA issued out a public notice for all taxpayers to migrate to i-Tax platform. Any taxpayer whose PIN has been deactivated because of failure to migrate to i-Tax will be expected to migrate to i-Tax immediately and start transacting their tax business through i-tax.
c) Supplying VAT-registered taxpayers while not registered for VAT obligation
In this case, the affected taxpayers may have reached the threshold for VAT registration but they have failed to register. Alternatively, the affected taxpayers may not have reached the threshold for VAT registration, but they have been charging VAT.
Failure to register for VAT while liable to register is an offence. Besides, charging VAT when not registered for VAT is also an offence. The VAT Act (2013) prescribes the two’s specific penalties, interests, and jail terms.
Therefore, the taxpayer will:
- Pay any VAT that may have been charged.
- Pay penalties and interests.
- Pay fines for failure to register for VAT.
- The persons may be compulsorily registered by the Commissioner.
Compulsory registration
The persons who have failed to register for VAT may compulsorily be registered by the Commissioner. Besides, the VAT registration may be backdated.
If the VAT registration is backdated, the persons must pay all the VAT they have been charging, fines for non-compliance, penalties and interests. Besides, there will be no input tax to deduct.
Compulsory registration also has income tax implications. The persons will also receive an income tax bill, penalties, and interests. The persons may not be allowed to deduct any expenses for income tax. Hence, the persons will be required to pay the full income tax.
Way forward
Any taxpayer whose PIN has been deactivated they are aware of why. Hence, they should keep all the documents ready for the tax assessments. The persons should calculate the taxes owed plus penalties and interests.
Besides, they should have money to pay the fines, interests and penalties. If the tax bill is high, talk to KRA and make instalment arrangements to pay the tax liabilities.
Feel free to send us questions or topics on tax and investments in Kenya that you would wish to be covered on this website.
Disclaimer
This post is for a general overview and guidance and does not amount to professional advice. Hence, www.taxkenya.com, its owner or its associates do not take any responsibility for the results of any action based on the information in this post or for any errors or omissions. Kenyan taxpayers must always rely on the most current information from the KRA. The tax industry in Kenya is very dynamic.
Email: taxkenya@gmail.com
