Rank: New-farer Joined: 8/12/2016 Posts: 22
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Flo-ology wrote:bennry wrote:vky wrote:tax experts, consultants, what happens in the following scenario;
setting up a small biz, biz will deal in goods attracting VAT, now, the VAT Act sets the amount of revenue a biz requires so as to be registered for VAT at over 5m per year, this biz will not generate enough revenue to meet the 5m threshold by VAT Act at least for two years of operation, when i asked two different KRA guys who both deal with VAT, about the above, they both said i should register without regard to what the Act says.
should i go with what the law says or should i register for VAT without meeting the set threshold, is that even possible Start the biashara as a limited company with only the income tax obligation. since your annual turnover is not likely to be over 5m you dont need to register for VAT and since its a ltd co no need for TOT. If you pay your self a salary note it will be liable to PAYE. Profits will be liable to tax at 30% TOT scenario- your gross revenue will be liable to tax at 3% which is a final tax. As this is taxed on revenues, you may be paying to the tax man more than you probably ought to since expense are not allowable. This is however more simplified since you pay on gross and spend the rest vile unataka. In both scenarios when your annual revenues hit 5m you will have to register for VAT. @Bennry, what if you dont have VAT obligation and you deliver services but the end user,lets say Company X, which is appointed on behalf of KRA as Withholding VAT agent withholds VAT and pays you less 6% ? VAT withholding agents are usually encouraged to trade with those with VAT Obligations. However in this case you will lose as you will be paid less and a Withholding certificate sent you. This is a measure that was put by KRA to ensure that those who trade with the government have to declare such transactions. If you try to file a nil return at the year end you will be informed that you sales during the year and you should declare them. If the goods you supply during tenders are Vatable i would recommended on getting an ETR from you supplier, get a VAT obligation and claim input VAT. You can always claim other input VAT expences that are realted to the busiiness such as stationary,stima, motor repiars etc to reduce what will be payable to KRA. In some instances you may even end up with a credit
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