NAIROBI, Kenya, Sep 19 – The Kenya Revenue Authority (KRA) has launched a countrywide crackdown on unscrupulous traders who have adjusted commodity prices in the pretext of charging VAT on goods which are tax exempt.
KRA Commissioner General John Njiraini said on Thursday that the crackdown was to ensure those who increase prices do so in accordance with the law and protect consumers from unscrupulous traders.
Njiraini said an enforcement team consisting of about 400 officers had been deployed to arrest and prosecute traders who are exploiting Kenyans under the guise of VAT.
He said those arrested risk a fine of up to Sh1 million and/or three years imprisonment.
The taxman clarified that VAT is only charged to businesses whose annual turnover is at least Sh5 million.
“Any persons charging VAT is required to provide an approved receipt generated through an electronic tax register showing the amount of VAT charged, and those without will be taken to court,” he stated.
He says KRA is working closely with the Treasury to make sure the law is clarified to Kenyans.
“There are disparities when it comes to what is processed and unprocessed goods and we shall publish the law soon so as to guide Kenyans,” he said.
He said the crackdown will be rolled out countrywide by Monday and will continue until KRA is satisfied that consumers are not being exploited.
The crackdown started early on Thursday morning in Nairobi, where KRA officers raided traders within Nairobi Central Business District (CBD) and its outskirts.
The crackdown comes after President Uhuru Kenyatta on Wednesday directed the National Treasury and KRA to publish regulations clarifying the VAT law to Kenyans pointing out that clarity would bar unscrupulous traders from taking advantage of ordinary citizens and overpricing goods.
“Whereas the VAT law is clear in its design, there have been questions about how it has been interpreted and the National Treasury should move in fast to clear the air on the issue,” Kenyatta stated.
Coalition for Reforms and Democracy (CORD) lawmakers also plan to introduce amendments to the VAT Act to exempt basic commodities.
The prices of milk, newspapers, mobile phone handsets and even electricity have gone up since early this month and Kenyans have raised concerns that traders were taking advantage of the new law to enrich themselves.