KRA orders fuel stations to issue motorists with receipts

The Kenya Revenue Authority (KRA) now wants oil marketers to issue electronic tax register receipts to motorists fuelling at their stations following the signing of the Finance Bill, which loaded 8 percent Value Added Tax on petroleum products.

The taxman says petrol stations risk penalties for non-compliance to the requirement which most marketers believe is logistically strenuous owing to the high number of transactions taking place in petrol stations.

KRA chief manager for domestic taxes Judith Njagi said authority officials will be using undercover purchase agents to determine non-compliant dealers who will then face appropriate penalties.

“Customers should not be demanding ETRs. Sometimes you will find KRA investigators doing mock purchases like normal consumers but with an agenda to find out who is not issuing ETRs. As soon as we fail to get it, the police will be waiting for you. Kindly always find yourself on the right path to avoid non-compliance penalties ,” Ms Njagi told Petroleum dealers during a stakeholder engagement forum held at the Times Tower, Nairobi, yesterday.

The dealers who were advised to have their ETR machines reflect the 8 percent instead of the normal 16 percent, were also asked to ensure other items sold in shops located within their stations are properly declared for VAT.

Speakers at the forum termed the directive a logistical hurdle, which they should be exempted from since petroleum is a highly regulated product whose sales are easy to track through the pump and supply chain.

Petroleum products had been exempted from VAT until last month when the government introduced the tax which pushed up the prices of diesel, petrol and Kerosene.

Petrol stations rarely issue ETR receipts unless one demands, a scenario KRA believe is not only illegal but also a possible scheme to avoid accounting for sales.

The dealers were also reportedly making disproportional input VAT claims which do not reflect their sales volumes.

“At the petrol station, even if we do not issue an ETR receipt, it should be as easy as looking at what has gone out of my pump to tell what sales I have made. At the end of the day, I will be accounting for sales which will obviously reflect the 8 percent VAT. How would this be possible for someone operating along a busy road with close to 2'000 motorists fuelling per day? a petroleum dealer attending the forum posed.

Ms Njagi said KRA policy analysts engage oil marketers to find alternative ways to ensure they declare their sales and reflect accurate tax collection.