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UNDERSTANDING V.A.T
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Almost everyone with a business venture has the same depressing story regarding the first 20 days of every month. Usually, this is because of the horror that is VAT filing and the hefty penalty that comes from not filing it on time.
To begin with, very few people understand the concept of Value Added Tax. To most, it is just another of the many taxes we pay in Kenya. Even more shocking, we are taxed for V.A.T. every single day, but a great majority of us have no clue what it entails.
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Dare to say that there are countries that do not allow for VAT, and the number of eyebrows going up will astound you. This is to say; we almost always acknowledge its existence but with very little knowledge to none of what it is.
To make it easy for us, we should probably give it another relatively easy name to understand. We shall call it the consumption tax.
VAT consumption tax is a type of tax placed on a product’s value at every stage of the typical supply chain. There is a need to emphasize that only Taxable products and services are subject to Consumer tax. In other words, some products and services do not qualify for VAT.
Distinguishing such products and services can be challenging, especially if you are not familiar with V.A.T. terms provided by Kenya Revenue Authorities (KRA).
Who is eligible to register for VAT?
KRA stipulates that any individual, a company, or a partnership that has supplied or intends to generate a turnover of Ksh. 5,000,000 p.a worth of taxable supplies must register for VAT.
How do you register for VAT?
KRA has tried to simplify the process of registration by making a significant shift from manual registration, where one had to visit their offices to register physically. You can now do it at the comfort of your home using the online digital platform identified as iTax.
It sounds easy.
Merely logging in using your computer, providing the information needed, and you’re all set and good to go. However, what comes after the registration is what may have you raking your head until kingdom come.
What happens after I register?
Once registered, you automatically have an obligation to KRA to file the monthly returns regardless of whether there were any transactions in that month or not. The process of filing can be an uphill task to many due to its complex nature.
KRA has also explicitly laid out the tax rates for the different categories of supplies it identifies. (This will be captured well in detail in the “how to file V.A.T.” article.
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Understanding, registration, and filing of V.A.T is more often a grueling task for most organizations. However, it would help if you didn’t have to halt your daily operations up to the 20th of every month so that you can deal with V.A.T.
Get yourself a team of certified public accountants who exists purposely to lighten your workload and to lessen your worry. We are a team of experts who have undergone professional training in dealing with KRA-related activities.
We guarantee to take care of your V.A.T. needs to your satisfaction, adherence to KRA specifications, and terms with an esteemed degree of professionalism.
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