Doing Business in Kenya - RSM International

A credit note should be serially numbered and should have the following details:• The name, address and the PIN of the person to whom it is issued; and• Sufficient details to identify the original invoice.Debit notes may be issued where there is a further charge on a supply already made.It should show all details required for a tax invoice and in addition, it should showdetails of the tax invoice issued at the time of the original supply.4.8.8 Bad DebtsWhere a person has supplied goods or services and has accounted for and paid taxon that supply but has not received payment from the buyer, he may apply for arefund or remission of the tax upon lapse of 3 years from the date of supply or if thebuyer has become legally insolvent. An application for refund in respect of bad debtsmust be made within 5 years from the date of supply.Under these conditions, an application can be made to the Commissioner for refundor remission of the tax involved. The application should be accompanied by:• A court decree to prove the insolvency of the debtor;• A copy of the tax invoice provided in respect of each taxable supply upon whichthe claim is based;• Records or other documents, showing that the tax has been accounted for andpaid on each supply upon which the claim for a refund of tax is based;• Evidence that every reasonable effort has been made to have the debt settled;and• A declaration by him that he and the buyers are independent of each other.4.8.9 Input TaxInput tax is tax paid by a registered person on the purchase or importation of goodsor services to be used by him for the purposes of his business.Registered suppliers are allowed to deduct the input tax charged to them on suppliesfrom output tax on supplies made by them in the course of furtherance of theirbusiness. The difference between the output tax and input tax is tax payable to KRAor recoverable from KRA (where input exceeds output).Where a registered person acquires as stock in trade any goods of which VAT has notbeen charged, he is to assume that the purchase price is inclusive of VAT and claiminput tax on such goods.Where a registered person claims input tax in respect of business premises usedin making taxable supplies and subsequently sells or disposes off the building or52DOING BUSINESS IN KENYA