BY SAM ALFAN.
Kenya Revenue Authority (KRA) has accused French retail chain Carrefour of failing to provide documents to support a claim of tax refund of Sh523 million.
KRA blamed the retail store for causing the delay by failing to furnish the required documents and bring the matter to a close. The taxman says it cannot issue reliefs before the process has been completed to the satisfaction of the commissioner.
The French firm raised an objection over a year ago and supplied KRA with hundreds of invoices each month without getting a resolution even as the disputed tax claim continued to incur an additional Sh65 million interest.
Ahmed El-Gindy Majid Al Futtaim Hypermarkets country finance manager asked the court to declare the implementation of the digital Value Added Auto Assessments (VAA) as illegal and force KRA to accept the disputed input tax.
El-Gindy said the VAT claim was colossal and KRA’s dispute could impact its operations and budget for paying suppliers, employees and debts.
But KRA’s manager in the VAT Automated Audit Unit (VAA) Fred Ndeleva said it has been requesting documents and records from Carrefour, which the retail chain has failed to adequately furnish.
He says it is virtually impossible for the invoices to be reviewed within 60 days for the commissioner to issue a well-reasoned objection decision to Carrefour.
Taxman VAA boss said all businesses in Kenya claiming input VAT from KRA undergo the same verification process as per the law, including all other retail stores and there is nothing discriminatory about being asked to comply with the law.
KRA, he said, introduced the VAA module of iTax, which enables cross-validation of date from invoice declarations made in the buyer’s VAT returns, with those made in the corresponding seller’s returns.
He said taxpayers were notified of the upcoming online enhancement that would enable cross matching of invoice declarations to mitigate against cases related to VAT fraud.
In September last year, taxpayers were given 14 days to amend their January-May 2018 VAT returns, failure to which all the outstanding inconsistencies would be disallowed.
Carrefour served KRA with a notice of objection and the taxman asked the retail chain to provide documents such as purchase invoices, supplier statements and proof of payment to support the disallowed invoices, leading to the review.
KRA further requested for a sample of the input tax transactions that had been disallowed and the request was accepted and a sample sent on February 10, 2020. KRA said 80 per cent of the disallowed amounts translated to 8,487 transactions of the 32,147 transactions.
In May last year, Carrefour provided copies of the input tax invoices of a few of the sampled transactions but KRA noted that the retail chain had not provided the related proof of payment as per the request it had made to the supermarket.
This is after carrefour supermarket sued the taxman over Sh500 million tax demand.
Majid Al Futtaim Hypermarkets Limited which has replaced most space occupied by troubled Nakummat supermarket opposed to the money being demanded by the taxman.
KRA is accused of contravening the right to fair administrative action, which in turn has placed a burden on the supermarket owners to account for failures that may be attributed to the suppliers.
