Have You Ever Thought Managing VAT Compliance Is as Easy as 1,2,3?

Have You Ever Thought Managing VAT Compliance Is as Easy as 1,2,3
Tally Solutions | Updated on: October 27, 2022

Every business has a legal obligation to remain tax-compliant.

Failing to comply with the national tax requirements puts your business at risk of losing money through financial penalties. It also impacts the reputation of your business, not forgetting the risks of closure by KRA.

Some of the things your business needs to do to remain tax compliant include:

Invoicing Guidelines for Businesses in Africa

Kenya VAT Guide

  • Registering for VAT: The very first tax obligation for your business is to register for VAT under the KRA iTax portal. Registering will enable you to get a KRA PIN for your business, through which you can perform other compliance activities.
  • Remitting VAT taxes on time: Once you’re a registered taxpayer, your business must stay compliant by remitting its VAT taxes on time through the e-invoice generated on the KRA iTax platform.
  • Filing monthly VAT returns: Another tax compliance obligation is to file your monthly returns. Businesses registered under VAT should file monthly KRA returns using the VAT Form-3 on the KRA iTAX portal.
  • Generating VAT invoices: When your business makes sales subject to VAT tax, you should always create and send VAT invoices with all the necessary information about your business and the transaction involved.
  • Keeping Updated Tax Return Certificates: Finally, your business should always keep updated tax return certificates. These will be issued to you in electronic form after filling your monthly VAT returns.

Even though managing VAT compliance is a big challenge for most businesses, it becomes as easy as 1,2,3 when you utilize a credible business management software like TallyPrime.

This makes your work easy and saves you time to concentrate on other important aspects of your business.

Challenges businesses encounter in being tax compliant

Most businesses bear the consequences of non-compliance, not because they’re unwilling to comply, but because of the challenges and obstacles they meet along the way.

Some of the challenges that businesses encounter in being tax compliant include:

Not knowing how to file the returns

Some businesses fail the compliance test because they do not know how to file their tax returns.

Unlike before, when people would physically go to KRA offices to file their returns, it's currently done online using the KRA iTax platform. However, most business owners still do not understand how to use the platform hence, they remain on the non-compliance side of the law.

If you’re a business owner who doesn’t understand how to file your returns, TallyPrime compliance management software is there to lift the burden off your shoulder.

Insufficient tax information

Another challenge most businesses face in tax compliance is the lack of sufficient tax information.

This means they are not fully aware of all the aspects involved in tax reporting. Some information that most businesses remain oblivious of includes their level of access to the tax compliance system, the type of taxes they need to file, the documents to avail, and how the taxes are computed.

Some business owners find the relevant tax information too complex to understand, leading to unintentional non-compliance.

High compliance cost

Kulipa ushuru has always been a headache to most businesses in Kenya.

In addition to the money spent on tax, they find it hectic and time-consuming to comply with all the government requirements for tax compliance.

For instance, all entities registered under VAT have the responsibility to keep detailed records of all their output and input taxes to enable them to file their monthly VAT returns. This can be cumbersome and require them to employ skilled personnel to help them keep up, which is an extra compliance cost for the business.

Consequently, these businesses evade the high costs involved, and end up on the non-compliant side of the law.

VAT inconsistencies

With the introduction of the online iTax system, it’s easy for KRA to detect VAT inconsistencies.

If you ask most business owners, they have received emails from KRA with VAT inconsistency reports. Such inconsistency occurs when the VAT invoice details sent by the buyer and the seller do not match in terms of the invoice number, date, KRA pins, and the transaction amount.

Under-reporting and over-reporting while making tax return payment are also common causes of inconsistency, which can occur from either ends of a transaction (either from the buyer or seller).

Insufficiently utilizing input tax

Input tax is the tax added to the price of goods and services before selling to your consumers.

Some goods are exempted from VAT by the government and are not subject to input tax. VAT-registered consumers help businesses carry the burden of VAT through input tax.

However, some business owners fail to utilize input tax, meaning they bear all the tax burden alone, which affects their compliance and profitability.

Have you ever imagined that doing all these compliance activities correctly can be as easy as 1,2,3? With the right tools like verified compliance management software, you can sleep knowing that your business is safe from the dreaded consequences of tax non-compliance.

How to remain tax-compliant with TallyPrime

The government urges all business owners to remain tax compliant through its 'Tulipe Ushuru, Tujitegemee’ campaign.

Therefore, as a business owner, it's your obligation to implement the necessary measures for your business to remain compliant at all times.

With a flexible business management system like TallyPrime, you can put all your compliance activities in order, right from VAT invoicing to filing returns.

This software automates the whole process and makes it more cost-efficient for you. The software helps you:

Manages all tax activities

TallyPrime helps your business manage all tax compliance activities from invoicing, filing returns, and helping you keep updated tax return certificates.

Since the whole process is automated, you don’t need to worry about any aspect of compliance missing.

The tax compliance activities that this software manages for your business include:

  • Configuring VAT rates
  • Generating invoices
  • Providing real-time VAT reports
  • Tagging ETR into VAT invoices
  • Generating real-time payable VAT for a given period
  • Preparing VAT returns for uploading on the KRA portal
  • Saving your finalized returns

Detects and eliminates VAT errors

The intuitive intelligence designed in TallyPrime helps you to generate 100% accurate returns in a matter of minutes. This is made possible using Tally's renowned 'Prevention - Detection - Correction' technology. It is designed with the Inbuilt intelligence to understand the return requirements and includes only those transactions which should be included in the return.

This ensures that your returns are correctly filed, so you do not receive inconsistency reports from KRA now and then.

Meets deadlines

TallyPrime files your VAT returns on time, so you don’t need to worry about penalties due to late submissions.

Most businesses incur financial losses from filing their returns later than the expected deadline. With this software handling all your compliance activities, late submission is not a thing to worry about.

Saves you time and money

The compliance management software works in a way that saves your business time and money while increasing your efficiency.

Think about all the costs you incur while trying to remain tax compliant—the headache of understanding tax jargon, the time wasted, or the cost of employing tax personnel.

TallyPrime covers all these for you and leaves you handling other operational needs of your business.

Updates your compliance

Since the tax regulatory environment is always changing, TallyPrime keeps track of every change and updates your compliance records accordingly.

The software stays updated with the latest regulatory requirements in Kenya, keeping your business 100% compliant at all times.

Stay compliant all the time with TallyPrime

With TallyPrime, remaining tax-compliant is a walk in the park.

When all the gruesome compliance activities are handled for you, you’ll have all the time left to concentrate on other important aspects of your business, like marketing and product improvement.

TallyPrime compliance management software is, therefore, an essential tool to improve the efficiency and effectiveness of your business operations, and help you seamlessly achieve your business goals.

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Ensure seamless business operations with TallyPrime.