KRA Missing Trader: Why Input VAT Gets Disallowed and How to Protect Your Claims

Updated 31 October 2026

A “missing trader” is a supplier that KRA cannot trace or verify, often one that charges VAT on invoices but does not pay it to KRA. When KRA flags a supplier this way, it may reject the input VAT its customers claimed on purchases from that supplier. In August 2026, the Tax Appeals Tribunal ruled that KRA cannot disallow input VAT on the missing trader label alone if the buyer shows the purchase was genuine. Here is what that means and how to protect your claims.

Updated October 2026. General information only; consult a tax adviser on specific assessments.

How input VAT works

A VAT-registered business deducts the VAT it paid on business purchases (input VAT) from the VAT it charged customers (output VAT). Under the VAT Act, the deduction is allowed if you are VAT registered, make taxable supplies, claim within the allowed period and hold the required documents, including a valid tax invoice. Since eTIMS, invoices must be transmitted to KRA; see eTIMS vs ETR.

What happened in the Chairmania case

KRA disallowed KSh15.76 million in VAT claimed by events company Chairmania Events Ltd on tents, projectors, sound systems, chairs and video equipment hired from Terrex Traders Limited, which KRA had classified as a missing trader. KRA said bank statements did not show payments to Terrex and that supplier statements and delivery notes were missing. Chairmania produced tax invoices, electronic receipts, proof of payment, supplier ledgers and payment vouchers.

The Tribunal set the assessment aside. It said the burden of proof “swings like a pendulum”: the taxpayer must first produce evidence, but once it does, KRA must investigate and prove the transactions were not genuine. KRA can use third-party information such as a missing trader designation, but must corroborate it before denying a claim, The Kenyan Wall Street reported.

How to protect your input VAT claims

Before you buy

• Confirm the supplier’s KRA PIN and VAT registration on the iTax PIN checker.
• Check the supplier issues eTIMS invoices; verify a sample with eTIMS invoice verification.
• Be wary of new suppliers offering unusually low prices, cash-only terms or invoices from a different name than the one you pay.

When you buy

• Pay by bank or M-Pesa to the supplier’s own registered account, never cash to individuals.
• Keep delivery notes, goods received notes, contracts or purchase orders, and photos for hired equipment.
• Match each invoice to a payment record.

If iTax rejects a supplier’s PIN

If iTax blocks a claim because the supplier is flagged, do not force it through. Ask the supplier to resolve its compliance and claim in a later period when allowed, keeping your documents ready.

If KRA raises an assessment

1. Respond within the deadline in the notice.
2. Submit invoices, payment proof, delivery records, supplier ledgers and evidence the goods or services were used in your business.
3. If KRA confirms the assessment, you can object and then appeal to the Tax Appeals Tribunal.

If you owe tax and need time, see how to apply for a KRA payment plan.

FAQ

What is a missing trader in KRA terms?

A supplier KRA cannot trace or verify, often one that charges VAT but does not remit it.

Can KRA reject my input VAT because my supplier is a missing trader?

KRA may raise the issue, but the Tax Appeals Tribunal ruled in 2026 that it must investigate and prove the purchase was not genuine once you provide supporting documents.

What documents support an input VAT claim?

A valid eTIMS tax invoice, proof of payment, delivery notes or contracts, and supplier ledgers.

Related: VAT Registration in Kenya 2026: Requirements, KSh5m Threshold and iTax Steps

Related: KRA checking over one million landlords' rental income declarations