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Introduction

Many times, VAT registered taxpayers are deregistered by the tax Commissioner.

De-registration happens with the taxpayers knowledge or without their knowledge.

What is VAT de-registration?

VAT de-registration means that the person will cease being registered and hence should not comply with the provisions of the VAT Act (2013). This means that the deregistered person should cease presenting as VAT registered persons and should not charge VAT. Specifically, the person should not account for VAT and is not expected to:

1. Issue tax invoices.
2. Maintain books and records for VAT purposes.
3. Deduct input VAT from the output VAT.
4. Make VAT returns.

Reasons for de-registration

There are many reasons why the tax Commissioner will deregister a VAT-registered taxpayer. The following are some of those reasons:

1. Business ending – in bankruptcy cases, winding up, where liquidation proceedings have been instituted etc.
2. Commissioner has reason to believe that a person is about to leave Kenya permanently.
3. The person has ceased to carry on business in Kenya.
4. The Commissioner believes that the person has ceased to carry on business in Kenya
5. The taxpayer has died.
6. The person had low taxable turnover (less than kshs 5 million in the year of income).
7. Taxpayer has applied for VAT de-registration.
8. The tax Commissioner discovers that VAT registration was done using fake documents.
9. Where a taxpayer applies for a new personal identification number (PIN) to avoid old tax debts under the old PIN.
10. De-registration for other taxes e.g. income tax.
11. Failure to comply with other taxes e.g. income tax, domestic Excise duty etc.
12. Where a taxpayer is not properly registered for example where a taxpayer has been registered for the wrong obligation.
13. Where a taxpayer was registered using the wrong documents.

Note that these are not the only reasons that will make the tax Commissioner de-register a taxpayer. Each tax case is assessed on its merit.

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Disclaimer

This post is for general overview and guidance and does not in any way amount to professional advice. Hence, www.taxkenya.com, its owner or associates do not take any responsibility for results of any action taken on the basis of the information in this post or for any errors or omissions. Kenyan taxpayers must always rely on the most current information from KRA. Tax industry in Kenya is very dynamic.