VAT Module 12 VAT Offences Dr Wakaguyu waKiburi

VAT Module 12: VAT Offences ©Dr. Wakaguyu wa-Kiburi (www. taxkenya. com) 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 1

Scope a. Offences 1. 2. 3. 4. 5. 6. 7. 8. 9. 9/17/2020 Registration and Deregistration PIN Documents Tax Returns Tax Payment Misleading Statements Fraud Recovery of Tax Enforcement Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 2

Scope cont’ 10. Aiding or Abetting an Offence 11. Offences by Officers and Staff of Authority 12. Employees Agents and Companies b. c. d. e. f. Sanctions of Offences Payment of Tax on Conviction Jurisdiction to Try Cases Officers to Prosecute Tax to be Paid Despite Prosecution 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 3

Registration and Deregistration a) An offence when a person does not apply for: i. Registration. ii. De-registration. b) An offence when a person applies for deregistration (removal of VAT obligation) when they do not qualify. c) Note: If other tax Acts do not provide for this offence VAT Act applies. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 4

PIN Offence to use: i. False PIN on tax returns or other documents. ii. PIN of another person (not in section 13(3) – use of PIN by tax agents) iii. Obtain PIN using false or forged documents or through fraud, deceit or misrepresentation. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 5

Documents Offence if a person: § Fails to keep, retain or maintain documents without excuses for a certain tax period. § Deliberately prepares or maintains or authorizes another person to prepare or maintain false documents. § Falsifies or authorizes another person to falsify tax related documents. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 6

Tax Returns § Failure to submit a tax return by the due date. § Failure to submit other documents without reasonable cause. § If convicted, in addition to the sanction imposed person will furnish all the tax returns within the time specified by the Court. § This section also applies where other tax Acts do not provide for the offence. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 7

Pay Tax § Failure to pay tax by the due date. § Failure to pay correct amount of tax. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 8

Misleading Statements § Make a statement with false or misleading materials or particulars to an authorized tax officer. § Omit any matter or thing which results in the statement being false or misleading in a material particular. § A statement is either oral or written [Section 84(8)]. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 9

Fraud § A persons commits an offence in relation to a tax period when they. Examples: a) Omit any amount of tax from a tax return. b) Claim relief or refund they are not entitled to. c) Make incorrect statements that affect their tax liability. d) Prepare false books of accounts or other records relating to that other person. e) Falsifies books of accounts or other records. f) Default on any obligation imposed under the tax law. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 10

Enforcement § A person fails to: a) Provide information or produce documents for examination as required. b) Appear before the Commissioner. c) Answer any question by the Commissioners or Authorized officer. d) Provide reasonable facilities and assistance as required. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 11

Obstruction of Authorized Officers § It is an offence when a person: a. Hinders the Commissioner or authorized officers to perform their duties under the law. b. Obstructs the Commissioner or authorized officers to perform their duties under the law. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 12

Aiding or Abetting an Offence a) It is a principal offence when a person aids, abets, assists, incites or induces another person to commit an offence under any tax law. b) The person is liable for the same sanctions as the offence. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 13

Offences by Officers and Staff of Authority In this section authorized officer includes: a) A person employed by the authority in any capacity. b) A person engaged by the authority in any capacity. c) A former officer or employee of the authority. § A person commits an offence if they contravene Section 6 on confidentiality… 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 14

Employees, Agents and Companies a) If a person acting as an employee or agent commits an offence, the employer or principal are also guilty. b) If the offences are by a company, the person liable is the one who was: i. The CEO, MD, a director, company secretary, treasurer or other officer in company. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 15

Employees, Agents and Companies cont’ ii. Acting or purporting to act as CEO, MD, director, company secretary, treasurer or other officers in company. § The person is not liable if the offence was : a) Committed without the person’s consent or knowledge. b) Person exercised reasonable care to prevent the commission of the offence. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 16

Sanctions of Offences § Recovery of tax [Section 98(1)] and offences by authorized officers and staff of KRA [Section 102(1)] a) Fine not exceeding kshs 2 million, and to b) Imprisonment not exceeding 5 years or c) Both. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 17

Sanctions of Offences cont’ § Fraud in relation to tax (Section 97): a) Fine not exceeding kshs 10 million or b) Double the tax evaded whichever is higher, or c) Imprisonment for a term not exceeding 10 years or both. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 18

Sanctions of offences cont’ § Tax agents (Section 92): a) Fine equal to double the tax evaded or b) A fine not exceeding kshs 5 million whichever is higher or c) Imprisonment for a term not exceeding 5 years or d) To both. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 19

Sanctions of offences cont’ Any other offence under the Act: a) Fine not exceeding kshs I million or b) Imprisonment not exceeding 3 years or c) Both. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 20

Payment of Tax on Conviction § If a person is convicted for unpaid taxes, the court may order the person to pay full or part amount of tax in addition to or in substitution of any other penalty. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 21

Jurisdiction to Try Cases a) Prosecution may be in any place in Kenya where the person is in custody as if the offence was committed in that place. b) Offences will be prosecuted in the courts designated to try offences of corruption and economic crimes. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 22

Officers to Prosecute § Authorized officers representing the Commissioner: 1. Will prosecute case under the direction of the Director of Public Prosecution. 2. The officer has all the powers of a Public Prosecutor. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 23

Tax to be Paid Despite Prosecution a) Any amount of principal tax, penalties and interest still due should be paid despite prosecution. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 24

Q&A 1. 2. 3. 4. 5. 9/17/2020 Prepared for www. taxkenya. com by Dr. Wakaguyu wa-Kiburi for MTC 822 Semester 25