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Value Added Tax in Kenya

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Value Added Tax in Kenya
Registration for VAT
When is VAT payable
Withholding VAT
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What is Sales Tax / VAT


This is commonly known as Sales Tax, but in Kenya this tax is known us Value Added Tax (VAT). This is tax charged on sale of goods and services both inside and outside Kenya. It also include supply of imported taxable services by a non-resident in Kenya.

 

Collection and Payment


Value Added Tax is charged to customers on importation or supply of goods and services. The registered tax payers collects that tax on behalf of the government and accounts for the VAT collected by them. The burden of VAT is borne by the customers and not the supplier. In other words the money collected is not business profit but should be treated as a liability in the books of the supplier.

Input VAT or purchases VAT should be claimed before remitting the balance to the tax authority. The amount of VAT output or VAT on sales should be reduced by input VAT to determine the amount payable.

 

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Registration for VAT

If a person 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 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 and shall within thirty days of becoming so liable, apply to the tax authority for registration.VAT is charged at either zero rate (0%) or sixteen percent (16%) as per the First and Second schedule to the VAT ACT 2013.

However, voluntary registration is also allowed if a person is below the taxable supplies threshold subject to other provisions of the VAT ACT 2013.

 

 


 

When is VAT payable

Tax due due and payable at the time of supply.but a registered person may defer payment of tax due to a date not later than the twentieth day of the month succeeding that in which the tax became due.

How to pay VAT

Value Added Tax is paid through the iTax platform in the Kenya Revenue Authority website (http://www.kra.go.ke) and generate an Eslip which will be used to pay to the bank. The Eslip can only be generated after tax filing or no advance tax payment.

 


 

Withholding VAT

Withholding Value Added Tax is tax withheld before making payment to a registered VAT tax payer at 6% of the taxable value. Only appointed tax payers are required to act as VAT withholding agents.

VAT withheld is payable by 20th following the month of deduction.

 

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