Last reviewed – 26 February 2025
Overview
VAT is levied under the VAT Act, Cap 476, and regulated by the VAT Regulations, 2017. It applies to value addition and follows an input-output mechanism.
VAT Rates in Kenya
| Category | VAT Rate |
|---|---|
|
Standard-rated supplies
|
16% |
|
Zero-rated supplies
|
0% |
|
Exempt supplies
|
No VAT applied |
VAT Registration
| Requirement | Details |
|---|---|
|
Mandatory Registration
|
Businesses with taxable supplies exceeding KES 5 million in 12 months. |
|
Voluntary Registration
|
Businesses below the threshold can apply if they meet set conditions. |
|
Non-residents (Digital Services)
|
Required to register regardless of turnover if supplying services via electronic networks or digital marketplaces. |
Input Tax Deduction & Compliance
Key Updates from Tax Laws (Amendment) Act, 2024 (TLAA)
| Change | Description |
|---|---|
|
Time of Supply (Exports)
|
Tax point now occurs when export documents are available.
|
|
Input Tax Apportionment
|
Removed the 90:10 formula, which allowed full deduction if exempt supplies were below 10%. |
|
Business Transfer Exemption
|
VAT-exempt status granted to the transfer of a business as a going concern.
|
VAT on Digital Marketplace Supplies (Non-Resident Suppliers)
| Requirement | Details |
|---|---|
|
Applicable Law
|
VAT (Electronic, Internet & Digital Marketplace Supply) Regulations, 2023.
|
|
Tax Rate
|
16% (Standard VAT rate).
|
|
Definition of Digital Marketplace
|
An online platform enabling users to sell goods or provide services.
|
|
Registration for VAT
|
Required for non-residents supplying taxable digital services in B2C (from April 2021) and B2B (from July 2022) transactions.
|
|
VAT Payment & Filing
|
Monthly VAT returns due by the 20th of each month.
|
Examples of Taxable Digital Services
For a comprehensive list of taxable digital services, please contact Quartet Solutions.
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