KRA cannot disallow a taxpayer’s input VAT claim solely because a supplier has been classified as a missing trader, the Tax Appeals Tribunal has ruled while cancelling a Ksh15.76 million tax assessment against an events company.
The Tribunal set aside the assessment against Chairmania Events Ltd after finding that KRA failed to prove that purchases from Terrex Traders Ltd were not genuine.
KRA had rejected the firm’s input VAT claims on equipment such as tents, projectors, chairs and sound systems, arguing that Terrex was a missing trader.
However, the Tribunal found that Chairmania had submitted invoices, electronic tax receipts, payment vouchers and supplier records. It ruled that once a taxpayer provides the required documents, KRA must independently investigate and prove the transactions were not genuine before denying VAT deductions.
