03/10/2025
Are you aware of what it means to be appointed as a Withholding VAT (WHVAT) Agent by Kenya Revenue Authority?
Yesterday, a business owner reached out to me in distress after receiving a demand letter from KRA for failure to deduct and remit WHVAT.
The surprising part is that they were not even aware they had been appointed as a WHVAT agent last year. According to them, when they were appointed, they wrote back by disputing the appointment by KRA.
Based on the letter below, KRA already effected the appointment in their system.
Now, when KRA appoints you as a WHVAT agent, you are legally obligated under Section 42A of the Tax Procedures Act to;
◾Deduct a percentage of VAT (commonly 2%) from payments made to VAT-registered suppliers
◾Remit the deducted tax directly to KRA ◾Issue a Withholding VAT certificate to your supplier so they can claim it as a credit.
📌Failure to comply with this obligation has serious consequences. KRA will compute the VAT that should have been withheld based on your purchases, add penalties and interest, and the liability will fall on your business, not your suppliers.
This is why proper record-keeping is so important. Without updated financial records, it becomes almost impossible to track which suppliers were VAT-registered and where deductions should have applied. When records are missing or inaccurate, disputes with KRA become costly and difficult to defend.
The lesson here is clear,
◾Businesses should never ignore KRA appointments or notices.
◾Compliance is not optional, and ignorance does not exempt you from responsibility. ◾Regularly confirming your compliance status and ensuring your books are clean, accurate, and up to date is the best defense when situations like this arise.
From my experience working with businesses on bookkeeping and compliance, I’ve seen how lack of awareness can cost companies thousands in penalties. Staying informed, proactive, and compliant is not just about avoiding fines, it is about protecting your business and giving yourself peace of mind.
📌I'm curious, how confident are you that your records and compliance practices could withstand KRA scrutiny today?
I'm Rose Onyango, I FIX messy books and help you stay Audit ready.
Find me at Romich Bookkeeping Solutions, on;
Email- [email protected]
Call/WhatsApp 0715296105