Kenya has hit the pause button on its value-added tax (VAT) system in a bid to tackle tax fraud and fake traders. The Kenya Revenue Authority (KRA) has decided to freeze all new online VAT registrations as part of a major clean-up operation.
Local media reports flagged this move as targeting the notorious “missing trader
” scheme, where fraudsters create fake companies, issue phony VAT invoices, and disappear without paying the taxes collected. This fraudulent activity was draining billions from the national treasury.
To combat these malpractices, KRA has not only halted new registrations but also enhanced internal controls to prevent staff members from aiding these fraudulent setups from within. The crackdown seems to be yielding positive results, with recent reports indicating record-high VAT collections of KSh 32.1 billion following the clampdown on fraud.
While this initiative is boosting revenue and curbing tax evasion, it has created challenges for legitimate businesses. Over 66,000 taxpayers have been removed from the system for failing to register or file returns consistently. Entrepreneurs seeking VAT registration are now facing obstacles such as the inability to issue invoices or claim input tax credits.
The freeze on VAT registrations has inadvertently slowed down business activities for compliant entities waiting for registration processes to resume. As Kenyan businesses navigate through this period of uncertainty, there is hope that transparency in transactions will ultimately outweigh the current bottlenecks.
In a similar vein of battling challenges, Era Iyayi, founder of Citiliving—a Lagos-based proptech startup—offers a poignant observation about addressing housing deficits in Nigeria by emphasizing physical construction over excessive reliance on technology solutions:
“
We cannot AI our way out of it.”
Iyayi’s company aims at providing tangible solutions by constructing housing units directly in high-demand areas like Maryland and Lekki instead of focusing solely on digital platforms for house-hunting.
On another note, Tigran Gambaryan bids farewell to Binance after enduring an arduous eight-month detention in Nigeria due to accusations of aiding money laundering activities. His departure signifies the end of a tumultuous chapter marked by legal disputes and personal hardships but hints at potential future endeavors in compliance work within the crypto industry.
From freezing VAT registrations to building homes brick by brick and navigating through legal storms in the financial sector—the intricate tapestry of challenges faced across different sectors highlights both resilience and innovation in combating systemic issues while striving for sustainable growth and accountability.
Leave feedback about this