Our Contacts

(+254) 0722801991
(+254) 0780801991
[email protected]

Download our app

Value Added Tax Act

The Long Title Of The Act States That It Is An Act To Review And Update The Law Relating To Value Added Tax; To Provide For The Imposition Of Value Added Tax On Supplies Made In, Or Imported Into Kenya.

  • Section 5 (1) of the Act states that VAT shall be charged in accordance with the provisions of this Act on:

(a) a taxable supply made by a registered person in Kenya;

(b)the importation of taxable goods; and

(c)a supply of imported taxable services.

  • Section 5 (2) states that rate of tax shall be:
  1. in the case of a zero-rated supply, zero per cent; or
  2. in any other case, sixteen per cent of the taxable value of the taxable supply, the value of imported taxable goods or the value of a supply of imported taxable services.
  • Section 5 (3) states that tax on a taxable supply shall be a liability of the registered person making the supply and become due at the time of the supply. This amount is recoverable by the registered person from the receiver of the supply, in addition to the consideration.
  • Section 5 (5) states: Tax on the importation of taxable goods shall be charged as if it were duty of customs and shall become due and payable by the importer at the time of importation.
  • Section 5 (6) goes on to say that tax on the supply of imported taxable services shall be a liability of the registered person receiving the supply and become due at the time of the supply.
  • Section 19 states that tax shall be due and payable at the time of supply. Payable by the registered person making the supply, the importer and the registered person receiving the supply as the case may be.
  • Section 30 states that where, in respect of any supply, tax has been paid in error, the Commissioner shall refund such tax. This is provided that no refund shall be made under this section unless a claim in respect thereof is lodged within twelve months from the date the tax became due and payable.
  • Section 31 states: Where a registered person has made a supply and has accounted for and paid tax on that supply but has not received any payment from the person liable to pay the tax, he may, after a period of three years from the date of that supply or where that person has become legally insolvent, apply to the Commissioner for a refund of the tax involved and subject to the regulations, the Commissioner may refund the tax provided that no application for a refund shall be made under this section after the expiry of five years from the date of the supply.
  • Section 35 (1) requires a registered person to display in a conspicuous place—
  1. the tax registration certificate at the principal place at which the person carries on business; and
  1. a copy of the certificate at every other place at which the person carries on business.
  • Section 42 (1) obligates a registered person who makes a taxable supply to furnish the purchaser with the tax invoice containing the prescribed details for the supply.
  • Section 43 (1) states that every registered person shall keep in the course of his business, a full and true written record, whether in electronic form or otherwise, in English or Kiswahili of every transaction he makes and the record shall be kept in Kenya for a period of five years from the date of the last entry made therein. Section 43 (2) lists the records to be kept under subsection (1) to include:
  1. copies of all tax invoices and simplified tax invoices issued in serial number order;
  2. copies of all credit and debit notes issued, in chronological order;

(c )purchase invoices, copies of customs entries, receipts for the  payment of customs duty or tax, and credit and debit notes received, to be filed chronologically either by date of receipt or under each supplier’s name

  1. details of the amounts of tax charged on each supply made or received
  2. tax account showing the totals of the output tax and the input tax in each period and a net total of the tax payable or the excess tax carried forward, as the case may be, at the end of each period
  3. copies of stock records kept periodically as the Commissioner may determine;
  4. details of each supply of goods and services from the business premises, unless such details are available at the time of supply on invoices issued at, or before, that time; and
  5. such other accounts or records as may be specified, in writing, by the Commissioner
  • Section 44 (1) states that every registered person shall submit a return, in the prescribed form and manner, in respect of each tax period not later than the twentieth day after the end of that period. Section 44 (5) in turns states that a person who fails to submit a return as required shall be liable to a penalty of ten thousand shillings or five per cent of the amount of tax payable under the return, whichever is higher
  • Section 34 provides for registration. It states that A person who in the course of a business—

(a) has made taxable supplies or expects to make taxable supplies, the value of which is five million shillings or more in any period of twelve months; or

(b)is about to commence making taxable supplies the value of which is reasonably expected to exceed five million shillings in any period of twelve months,

shall be liable for registration under the Act and shall, within thirty days of becoming so liable, apply to the Commissioner for registration in the prescribed form.

  • The Commissioner shall issue a registered person with a tax registration certificate in the prescribed form.
  • Upon registration, the person is required to comply with the Act by ensuring that:
  1. VAT is charged on all taxable supplies made at the specified rates
  2. A tax invoice is issued on supplies made
  3. Mothly VAT returns are filed by due date – 20th of the following month
  4. Where the output tax (VAT on sales) exceeds the input tax (VAT incurred on purchases) the difference should be paid to the KRA when filing the monthly VAT return.
  • Section 30 provides for refund of tax paid in error.

Where, in respect of any supply, tax has been paid in error, the Commissioner shall, except as otherwise provided by the regulations, refund such tax provided that no refund shall be made under this section unless a claim in respect thereof is lodged within twelve months from the date the tax became due and payable

  • Section 31 states: Where a registered person has made a supply and has accounted for and paid tax on that supply but has not received any payment from the person liable to pay the tax, he may, after a period of three years from the date of that supply or where that person has become legally insolvent, apply to the Commissioner for a refund of the tax involved and subject to the regulations, the Commissioner may refund the tax provided that no application for a refund shall be made under this section after the expiry of five years from the date of the supply.

The Kenya Revenue Authority is the State Collector of Taxes. For further information and assistance please visit their website www.kra.go.ke or contact any of their offices country wide from here.

Subscribe to our Newsletter

x

Subscribe to our mailing list to get updates to your email inbox