Section 25

Power to collect tax from person owing money to the registered person 

(1) Where any sum by way of tax is due and payable by a registered person, the Commissioner may, by notice in writing, require – 

(a) any person from whom any money is due or accruing or may become due to the registered person;

(b) any person who holds or may subsequently hold money for or on account of the registered person;

(c) any person who holds or may subsequently hold money on account of some other person for payment to the registered person; or 

(d) any person having authority from some other person to pay money to the registered person, to pay to the Commissioner that money or such sum as is sufficient to pay the tax that is due and payable. 

(2) Where a person required under subsection (1) to pay money to the Commissioner claims to be or to have become unable to do so by reason of lack of moneys held by, or due from him, he shall within seven working days notify the Commissioner accordingly, in writing, stating the reasons for his inability to do so. 

(3) Unless the Commissioner is satisfied with the reasons given under subsection (2) –

(a) sufficient moneys for the payment of the tax specified in the notice shall be presumed to be held by such person for, or due from him to, the registered person in respect of whom the notice is given under subsection (1); and 

(b) in any proceedings for the collection or recovery of that tax, such person shall be stopped from asserting the lack of those moneys. 

(4) The Commissioner may, by notice in writing, at any time require any person to furnish him within a reasonable time, not being less than thirty days from the date of service of the notice, with a return showing any moneys which may be held by that person for, or due by him to, the registered person from whom tax is due. 

(5) All payments made in accordance with a notice under this section shall be deemed to be made on behalf of the registered person and of all other persons concerned, and shall constitute a good and sufficient discharge of the liability of such person to the registered person, or any other person. 

(6) Any person who, without lawful authority or excuse 

(a) fails to comply with the requirement of any notice given to him under subsection (1) or (4); or 

(b) discharges any liability to a registered person in disregard of such notice, commits an offence and is liable on conviction to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding six months, or to both, and shall also be personally liable to pay to the Commissioner the amount of any liability so discharged. 

25A 
Finance Act, 2014 Finance Act, 2015 Effective 12th June 2015 
(1) Government Ministries, Departments and agencies shall, on purchasing taxable supplies, withhold six percent of the tax payable thereon at the time of paying for the supplies and remit the same directly to the Commissioner. Government Ministries, Departments and agencies or any other person appointed by the Commissioner shall, on purchasing taxable supplies, withhold six percent of the taxable value at the time of paying for the supplies and remit the same directly to the Commissioner: Provide that the Commissioner may, at any time, revoke the appointment of a withholding VAT agent, if he or she deems it appropriate to do so. 

(2) Subsection (1) shall not apply to taxable supplies for official aidfunded projects. 

(3) For the avoidance of doubt, the withholding of tax under subsection (1) shall not relieve the supplier of taxable supplies of the obligation to account for tax in accordance with this Act and the regulations.

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