Tax audits like any other audits require properly maintained tax files. Every taxpayer needs to keep, maintain, and retain separate tax files. Tax files are not used in isolation but together with other records and documents.
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Tax files are used together with other records and documents that are relevant to tax audits. This post has the tax files that every taxpayer must have. In case the files are kept by the auditors, a copy should be maintained by the taxpayer.
Files for Tax Audits
The tax files should have the following records and documents which should be filed separately for purposes of clarity and cross-checking:
Value Added Tax
- VAT returns.
- Evidence of imported services VAT payments.
- Withholding VAT certificates.
- VAT payment slips.
Income Tax
- Pay As You Earn (PAYE)
- Payroll summaries per month.
- Per diem schedules.
- PAYE payment schedules per month.
- PAYE payment slips per month.
2. Corporate income tax
- Annual tax returns.
- Audited accounts where applicable.
- Reconciliation of opening balances of balance sheet items and audited accounts.
- Opening creditors list for each year of income.
- Opening debtors list for each year of income.
- Closing Creditors list for each year of income.
- Closing Debtors list for each year of income.
- Opening stocks.
- Closing stocks.
- Opening balances in work-in-progress schedules (where applicable).
- Closing balances in work-in-progress schedules (where applicable).
- Project audits.
- Tender, local purchase orders (LPOs) documents.
- Year of income VAT and income tax reconciliations.
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3. Installment tax
- Method of installment tax used.
- The calculation for installment tax.
- Receipt of installment payments
4. Withholding Income tax
- List of sales subject to withholding income tax.
- Calculation of Withholding income tax.
- Withholding income tax certificates.
- Schedule of Withholding income tax certificates for each year of income.
- Withholding income tax receipts.
- Withholding income tax certificates.
5. Advance tax
- Schedule of commercial vehicles.
- Payment receipts for advance tax.
- Receipt of advance tax paid for commercial vehicles.
Others:
- All letters received from KRA (hard and soft copies).
- All letters were written to KRA (hard and soft copies).
- Tax assessments from the tax audit.
- Audit tax assessments payment slips.
- Receipt of any other tax payments.
Conclusion
The law requires every taxpayer:
- to keep, maintain and retain tax records and documents.
- to produce the records and documents when required to do so.
Question:
How many of the above tax records and documents does your company keep, maintain and retain?
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Dr. Wakaguyu wa-Kiburi
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