VAT is provided for in the VAT Act CAP 476 of the Laws of Kenya. It is an indirect consumption tax charged on taxable sales and importation of taxable goods and services. Registered traders act as collection agents while the final consumer bears the ultimate tax.

Registration Requirements

Done through registration for PIN on the iTax platform.

Registration is mandatory for any person who has supplied (or expects to supply) taxable goods and services whose value is more that Kshs. 5 million within a period of 12 months. Some businesses are however registered irrespective of their turnovers, for instance, dealers in motor vehicle spare parts, electronics, timber, jewelry and professional services.

Registration should be done within 30 days from the date on which a person becomes a taxable person.

Voluntary registration is allowed.

Mechanism of VAT

As a registered person, you are also legally bound to submit online monthly returns with details of tax on goods and services charged to your customers (output tax) and tax on goods and services charged by your suppliers (input tax). The amount payable to KRA is the difference between the output tax and input tax. If your input tax is greater than your output tax you should carry forward the difference as a credit to your next VAT return.

Electronic Tax Register (ETR)/Electronic Signature Device (ESD)

All persons supplying taxable goods or taxable services, or both are required to acquire ETR/ESD machines. Input VAT can only be claimed on invoices with ETRs/ESDs.

How GFS can assist you with VAT obligations:

Advising you on whether your business falls within the scope of VAT registration.

Advisory on deregistration.

Preparation and submission of VAT returns.

Profession support and representation in VAT disputes, litigations, investigations and tribunals.

Procuring and set up of the suitable ETR/ESD.