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KRA Tax Audits Are Coming in Hot! Are You Prepared?

Tax audits are increasing, and more businesses are finding themselves under KRA’s radar. Why? Because KRA has invested heavily in eTIMS, advanced data analytics, and third-party reporting, making it easier to detect tax discrepancies. If your financial records don’t align with what others report about you, you could face an audit.

What Triggers a KRA Tax Audit?

If your business falls into any of these categories, you might be at risk:

1. Filing NIL returns or failing to file at all
2. Not paying installment taxes or tax balances
3. Generating over Ksh. 5M in sales but not registered for VAT
4. Discrepancies between VAT and income tax returns
5. Significant variances in declared salaries, profits, and industry standards
6. Consistently reporting losses year after year
7. Cross-audits triggered by related businesses or suppliers
8. Reports from whistleblowers (yes, they get rewarded!)
9. Red flags from KRA’s intelligence and tax compliance units
10. Media exposure that attracts KRA’s attention

How to Protect Your Business from a KRA Audit.

KRA requires businesses to maintain financial records for at least five years for tax compliance. Proper bookkeeping ensures you have the necessary documents in case of an audit. Keep your records accurate, align with your tax filings, and declare all required taxes. If you receive an audit notice, respond promptly and seek expert tax guidance when needed.

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