VAT (value added tax) is charged at 16% on most goods and services in Kenya. Businesses above a certain size must register, charge VAT to customers, and pay it over to KRA monthly, after deducting the VAT they paid on business purchases.

When you must register

You must register if your taxable sales are, or are expected to be, more than KES 8,000,000 in any 12-month period. Apply within 30 days of reaching the threshold.

Registering voluntarily

Smaller businesses can apply to register voluntarily. It can make sense if your customers are VAT-registered businesses (they can reclaim the VAT you charge) and you pay significant VAT on purchases. It adds monthly paperwork, and KRA may ask for evidence of trading.

How to register

  1. Log in to iTax with the business’s KRA PIN (or your own, for a sole trader).
  2. Go to Registration and choose to amend PIN details, adding the VAT obligation.
  3. Provide details of the business activity and expected turnover, and upload any documents requested.
  4. Once approved, VAT is added to your PIN obligations.

Charging VAT

  • Add 16% to taxable sales, and show it on the invoice.
  • Issue invoices through eTIMS, which sends them to KRA. See eTIMS explained.
  • Some goods and services are zero-rated or exempt - check how your products are treated.

Work out prices with the VAT calculator.

Monthly returns

File a VAT return and pay by the 20th of the following month:

  • Output VAT - the VAT you charged.
  • Input VAT - the VAT you paid on business purchases, backed by valid eTIMS invoices.
  • Pay the difference, or carry forward a credit.

Nil returns are required in months with no sales. Late filing and payment bring penalties.

Turnover tax

Check with KRA how VAT registration affects a turnover tax obligation. See Turnover tax vs income tax.

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