International VAT Guides – Kenya
VAT rates in Kenya
How much is VAT in Kenya?
The VAT Kenya Act defines two tax rates applicable to taxable supplies in the country: a standard VAT rate of 16% and a zero rate.
A wide range of supplies are VAT-exempted. The details of these supplies can be found in the appendixes of the VAT Kenya Act.
| Kenya VAT Rate | Rate Type | Coverage and imposition |
| 16% | Standard Rate | The general VAT rate is applied to all transactions except the ones that belong to a group on which the zero-rated VAT applies or the ones being VAT-exempted |
| 0% | Zero Rate | Exports; transportation of passengers on air carriers; the supply of e-bicycles |
| Exempt-supplies | Exempt | Various types of food, different types of medicines, financial and insurance services; |
To ease the difficulties of navigating the maze of Kenya VAT rate complexities, the respective tax authority is continuously publishing practical VAT guides to help domestic and overseas businesses understand the rules of indirect taxes.
Compared with many other countries that have adopted consumption taxes and different VAT rates, the Kenya VAT system is less challenging. The Kenya VAT system is based on two VAT rates.
VAT threshold in Kenya
The VAT Act states that taxable persons who make supplies of goods or provide services in value exceeding KES 5 million are obliged to register for VAT.
The VAT threshold in Kenya is one of the principal factors driving economic operators, both domestic and foreign, to register for local VAT.
VAT registration threshold for resident businesses: Threshold of KES 5 million in the period of any 12 consecutive months
VAT registration threshold for non-resident businesses: Some non-resident businesses with a fixed place of business in Kenya could profit from being VAT exempted when the mandatory threshold isn’t reached beforehand.
VAT registration threshold for foreign providers of digital services: No threshold.
VAT Taxable Activities in Kenya
Types of taxable activities that mandate the VAT registration:
- Supply of goods and services for consideration;
- Exports;
- Imports of goods and services;
- Supply of digital services.
The first rules for introducing the VAT obligation for foreign providers of digital services and goods were adopted in October 2020. However, the effectivity has been postponed for six months since the Decree’s official publication date in the Gazette.
Since its adoption, the so-called Digital Marketplaces Supply(DMS) Decree has been modified through the amendments of the VAT Act. One notable change was the deletion of the KES 5 million threshold, which was in circulation for foreign providers of digital services until 2023.
Tax Representative in Kenya
In most cases, providers of digital services and products who don’t have a physical presence in the country can carry out their VAT compliance duties on their own without a need for a local tax agent.
Tax registration
Standard Registration
The domestic and foreign economic operators that have a physical presence in the country and are mandated to be registered should pursue the application for a registration certificate using the general registration procedure.
Upon successful registration, the Kenya Revenue Service will issue them a Personal Identification Number(PIN), which they will use to make purchases and sales mandatory.
Simplified tax registration
The Revenue Service has developed a simplified registration, filling, and payment system for overseas suppliers of digital services.
VAT on Electronically Supplied Services in Kenya
Digital Services
Foreign providers of digital services should register for VAT in Kenya and charge an adequate VAT rate for their supplies. As previously mentioned, overseas providers of digital services can no longer benefit from the VAT threshold.
Non-resident suppliers of digital services should charge VAT for both B2C and B2B transactions.
How much is VAT in Kenya for Electronically Supplied Services?
VAT rate Kenya: The VAT rate in Kenya for the digital goods and services supply is usually 16%.
| Example of taxable ESS in Kenya ↓ |
| Supply of digital products, such as software, connected changes, and updates of the software |
| Services that can be downloaded through the internet and saved on computer and/or mobile devices |
| Supply of music, films, and games, including games of chance and gambling games Services that are ordered online but delivered in a physical location (e.g., short-term accommodation, rental of transport services). For example, the services are supplied through the online digital platforms set up by the foreign entity and used at a physical location in Kenya. |
| Supply of distance learning |
| Supply of software, software services and maintenance |
| Access or downloading of images, jingles, films, ringtones, and other audio output |
Invoicing Rules
Starting in January 2024, Kenya has mandated that most taxpayers conducting taxable transactions in Kenya, both domestic and foreign, adhere to the e-invoicing system. However, overseas suppliers of digital products, third-party suppliers, and digital marketplaces are exempt from this obligation.
Third-party providers or digital platform operators could issue a tax invoice or receipt without the obligation to register to the Kenya e-invoice system and to issue a structured e-invoice.
It should be noted that that issuance of supporting fiscal document is mandatory for these suppliers. The invoices should have at least the content mandated by the Decree that introduced the VAT liability for foreign providers of digital products.
Invoice Requirements in Kenya
The invoice should at least contain the following:
General information:
- Date of invoice issuance;
- Unique invoice number and series.
Seller information:
- Company name;
- Full address (head office);
- Billing address if different from company address;
- VAT number.
Customer information:
- Name;
- Full address;
- VAT number (if applicable);
Fiscal Information:
- Description and breakdown of the goods or services – quantity, discounts, unit price, excl. VAT;
- VAT amount;
- Invoice Total.
Foreign Currency Invoice in Kenya
In most cases, the invoice should be issued in national currency. When it’s permitted to be issued in foreign currency, the VAT, total, and price of goods/services must be in local currency.
Reporting is done in local currency.
VAT Return in Kenya
Standard Return
Domestic and foreign taxable persons with a place of business in Kenya are usually obliged to submit a monthly return by the 20th day of the following month. The return and payment of the tax payable are due on the same date. There are exceptions to this reporting mandate.
The Revenue Agency can permit a taxable person to use a different reporting period if the taxable person fulfills all the mandatory requirements defined by regulations in specific cases.
Simplified Return
Non-resident digital providers can adhere to the Kenya VAT reporting system by following the simplified procedure developed by the Revenue Agency.
VAT Kenya Simplified return
| VAT Return Name | Simplified return via iTax Portal |
| Filling frequency | Monthly |
| Online Filling | Mandatory |
| Annual Return | No |
| Filing deadline | 20th following the reporting period |
| Payment deadline | 20th following the reporting period |
| Payment currency | KES |
| Language | English |
| Local VAT acronym | VAT |
Penalties for late reporting and omitted declarations
The VAT Act and Tax Procedures Act are the main points of reference regarding the definition of non-compliant behavior concerning the VAT framework.
Fines and penalties according to VAT Kenya:
Penalties for late registration – A person who has been found guilty of one or more offenses concerning the late registration for VAT should expect a fine not exceeding KSE 200,000, imprisonment for a term not exceeding two tears, or both.
A person convicted of an offense under the VAT Act for which no other penalty is provided shall be liable to a fine not exceeding KSE 1 million, imprisonment for a term not exceeding two years, or both.
Need assistance with VAT in Kenya?
We can help!
Dedicated account manager
As our client, you will be assigned to a multilingual account manager who can address all your tax-related inquiries and resolve any issues you may have at any time.
Single point of contact
We serve as single point of contact, simplifying the process and ensuring that your VAT compliance is handled efficiently and effectively within single stop.
Exclusive customer service
We support our clients, ensure fast response time and always go beyond by offering tailored assistance and individual attention.
Certified experts
Our team is combined of more than 40 experts, who can provide wide range of services and are certified members of IVA, AITC and VAT Forum. Currently we have more than 800 clients and knowledge how VAT works in 100 locations.