Value Added Tax (VAT) is a 16% consumption tax levied on the supply of taxable goods and services in Kenya. Managing your inputs and outputs carefully is critical to protecting your cash flow.
Registration Threshold
- Mandatory Registration: Your business must register for a VAT obligation on iTax if your actual or projected turnover hits KES 5 million or more within any 12-month period.
- Voluntary Registration: You can opt to register even if your sales are below the threshold—this is highly beneficial if your primary corporate clients require VAT invoices to claim their own input credits.
Strict Compliance Rules
- eTIMS Integration: You are legally required to transmit every single sale to the KRA in real-time using an approved eTIMS solution.
- The Validation Rule: KRA automatically cross-references all returns against eTIMS databases. Unverified supplier expenses without eTIMS documents will be disallowed, driving up your corporate tax bill.
- Filing Deadline: All VAT returns must be compiled, filed, and paid on the iTax portal by the 20th day of the following month.
