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Legal & Regulatory

How To Register For VAT Obligation In Kenya

  • BY waceke
  • October 1, 2024
kra times tower

In Kenya, Value Added Tax (VAT) is an indirect tax charged on the consumption of taxable goods and services supplied within the country or imported into Kenya. VAT is borne by the final consumer, but the responsibility for remitting this tax to the Kenya Revenue Authority (KRA) lies with registered taxpayers who meet specific criteria.

If you’re a business owner or expect to supply taxable goods and services worth Ksh 5 million or more in a year, you are required to register for VAT. This article provides a detailed guide on how to register for VAT obligation in Kenya, the necessary requirements, and your responsibilities as a VAT-registered taxpayer.

VAT in Kenya: An Overview

VAT operates under an input and output tax system. Here’s a simple breakdown:

  • Input tax: This is the tax paid by a registered business when purchasing goods or services for business use.
  • Output tax: This is the tax charged on the sale of taxable goods or services. The difference between input and output tax determines how much VAT is payable to KRA.

In addition to VAT registration, taxpayers must use the new eTIMS system, a digital solution by KRA that enhances tax invoice transmission. The system is accessible through computers and mobile apps and replaces the previous Electronic Tax Register (ETR) machines.

VAT Rates in Kenya

KRA has three primary VAT rates:

  1. 0% (Zero Rate): Applies to specific supplies listed under the Second Schedule of the VAT Act 2013.
  2. 8%: This rate is applicable to goods listed under Section B (1) of the First Schedule of the VAT Act 2013.
  3. 16%: This is the general VAT rate, charged on most taxable goods and services unless specifically zero-rated.

VAT Registration Requirements

To register for VAT in Kenya, you need to meet specific requirements. Here’s what you’ll need:

  • KRA PIN Number: Ensure that you have an active KRA PIN, which is essential for any tax registration.
  • Business Registration Details: For individuals, sole proprietors, partnerships, or companies, you’ll need the respective registration documents:
    • For partnerships: Partner PINS.
    • For limited companies: Company PIN and certificate of incorporation.
    • For sole proprietors and partners: Business name registration certificate.
  • Identification: Provide a copy of your national ID or alien ID (for foreigners).
  • Business Turnover: Demonstrate an actual or projected taxable turnover of at least Ksh 5 million in a 12-month period.
  • Business Premise Details: Information on the physical location of your business.
  • Active Email Address: For communication and correspondence from KRA.
  • Access to iTax Portal: You must have an iTax account where you will submit your VAT returns and payments.

How to Register for VAT Obligation on iTax

Follow these steps to register for VAT on the KRA iTax platform:

  1. Login to iTax: Begin by accessing the iTax portal at iTax Portal. Use your KRA PIN and password to log in.
  2. Navigate to Registration Tab:
    • After logging in, click on the Registration Tab and select Amend PIN Details.
    • Choose Online Form as your mode of amendment, and click “Next.”
  3. Amend Source of Income:
    • On the amendment page, select your KRA PIN. This will open up the sections you wish to amend.
    • Tick the Source of Income section to modify it. Proceed by clicking “Next.”
  4. Indicate VAT Obligation:
    • In the Obligation Details tab, tick the VAT checkbox and provide the expected registration date (usually the current date).
    • Estimate your turnover for the next year and provide the necessary business details, including the sector your business operates in.
  5. Add Business Details:
    • If you have a Business Registration Certificate or a Single Business Permit, input these details.
    • Repeat the process of clicking “Add” for verification.
  6. Submit the Application:
    • Once you have filled in all the required details, click the Submit button.
    • Download the acknowledgment receipt, which will also be sent to your registered email.
  7. Visit KRA Offices for Verification:
    • After submitting your application, visit a KRA office with your acknowledgment receipt and business registration certificate for verification. Once verified, your VAT registration will be approved, and you can start filing VAT returns.

VAT Filing and Deadlines

VAT returns must be filed and paid on or before the 20th day of the following month. If your business had no activity during the month, you are required to file a Nil VAT return. Failure to file VAT returns on time can result in penalties and interest charges.

Consequences of Late Filing or Payment

If you do not submit your VAT returns on time, KRA imposes a penalty, whichever is greater between:

  • Kshs. 10,000 or 5% of the unpaid VAT. Late payment of VAT attracts an additional penalty of 5% of the outstanding tax, with an interest of 1% per month on the unpaid tax.

Obligations of a VAT Registered Taxpayer

Once registered, you must adhere to the following:

  • Timely Filing: File VAT returns on or before the 20th of the following month.
  • Prompt Payment: Ensure that the tax due is paid within the stipulated time.
  • Accurate Reporting: Notify the KRA Commissioner in writing if there is any change in your business name, address, or type of business within 21 days.
  • Maintain Proper Records: Keep proper accounting records to back up VAT claims and payments.

Contact KRA

For further assistance with VAT registration or other tax matters, you can contact KRA through:

In conclusion, registering for VAT is a crucial step for businesses that supply taxable goods or services. With the digital tools provided by KRA, including the iTax portal and eTIMS, businesses can now manage their VAT obligations more efficiently. Make sure to meet all deadlines to avoid penalties, and always keep proper records for compliance.