Twenty-One Reasons for a VAT Debit Return

Post author:TaxKenya
Post category:Blog on Tax
Post last modified:February 15, 2022
Reading time:7 mins read

To be covered in this post:

Introduction
Types of monthly VAT returns
A VAT debit return
Reasons for a VAT debit return

Introduction

A taxpayer is expected to file a VAT return for every tax period. The VAT can have various net balances.

Types of monthly VAT returns

A monthly VAT return has a net amount. The net amount may be positive, negative, zero, or nil. This will result in either of the following VAT returns:

A debit return.
A credit return.
A zero return.
A nil return.

This post is about a VAT debit return

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A VAT debit return

In a debit VAT balance, a VAT debit return is submitted. The VAT amount in return should be paid before the 20^th day of the following month.

Reasons for a VAT debit return

There are many reasons for a VAT debit return. The following twenty-one reasons will result in a VAT debit return for the month.

There is output VAT with no input VAT and no credit carried forward.
The output VAT is more than the input VAT, and the credit is carried forward.
The output VAT is more than the input VAT, and there is no credit carried forward.
The output VAT is more than the credit carried forward, and there is no input VAT.
Clerical error.

6. Issuing of debt notes increases the VAT within the month.

7. Receipt of credit notes from suppliers.

8. Introduction of VAT in a supply where the supply was previously exempt.

9. Increase in tax rates, e.g., exercise duty.

10. Additional assessments by the tax Commissioner.

11. Omitting purchase invoices reduces the input VAT.

12. Under-declaration of purchases which reduces the input VAT.

13. VAT Auto Assessment (VAA), where KRA reverses some purchase invoices.

14. Price increase which increases output VAT.

15. No VAT credits were carried forward from previous months to reduce input VAT.

16. No Withholding VAT was carried forward from previous months.

17. No Withholding VAT in the month.

18. Increased sales in the month.

19. Increase in VAT rates.

20. Failure to Withhold VAT by customers or clients who are Withholding VAT agents.

21. Failure to remit Withheld VAT by customers or clients to KRA within the month.

These are the twenty-one reasons for a VAT debit return. Note these are not the only reasons. Other reasons may emerge since the tax industry is very dynamic.

What was covered in this post: