Kenya VAT Guide 2026

Overview — VAT in Kenya

Value Added Tax (VAT) in Kenya is governed by the VAT Act No. 35 of 2013 (as amended) and administered by the Kenya Revenue Authority (KRA). VAT is a consumption tax charged on the supply of taxable goods and services in Kenya, and on imports. Businesses registered for VAT must charge VAT on their taxable supplies (output VAT) and may recover VAT paid on their purchases (input VAT). The net difference is remitted to KRA or claimed as a refund. The standard VAT rate is 16%.

VAT Rates

Kenya applies three VAT rates depending on the type of supply:

• Standard rate — 16%: Applies to most goods and services, including general merchandise, electronics, vehicles, professional services, construction, and telecommunications.
• Zero rate — 0%: Applies to exports of goods and services, international transport, supplies to EPZ/SEZ enterprises, maize, wheat, milk, and certain pharmaceutical products. Zero-rated supplies allow the supplier to claim input VAT refunds.
• Exempt: Certain supplies are exempt from VAT, including financial services, insurance, education, healthcare, agricultural land, and supply of unprocessed agricultural products. Exempt suppliers cannot charge VAT or claim input VAT.

VAT Registration — KES 5 Million Threshold

Any person (individual or company) making taxable supplies with an annual turnover of KES 5 million or more must register for VAT with KRA. Registration is mandatory once the threshold is met or exceeded. Businesses below the threshold may voluntarily register. The registration is done online via iTax. Upon registration, the taxpayer receives a VAT certificate and must issue VAT-compliant invoices (E-TIMS invoices). Failure to register attracts penalties of KES 50,000 plus 5% of the tax due per month.

VAT Returns — Monthly / Quarterly Filing

VAT-registered persons must file VAT returns via iTax by the 20th day of the following month (for monthly filers). Quarterly filing is available for businesses with annual turnover below KES 50 million. The return declares output VAT, input VAT, and the net amount payable or refundable. Payments must be made by the same 20th deadline. Late filing attracts a penalty of KES 10,000 or 5% of the tax due (whichever is higher), plus interest at 1% per month on unpaid amounts. VAT refunds are processed by KRA and typically take 30–90 days.

Electronic Tax Invoice Management System (E-TIMS)

Kenya has implemented the Electronic Tax Invoice Management System (E-TIMS), requiring all VAT-registered businesses to issue electronic invoices in real-time to KRA. E-TIMS invoices include a unique invoice number, KRA PIN, VAT amount, and a QR code. Purchasers can verify invoices via the KRA app. E-TIMS is mandatory for all VAT-registered taxpayers and is enforced through penalties for non-compliance.

Digital Services VAT — 16%

Non-resident digital service providers — including streaming platforms, ride-hailing apps, freelancing platforms, and online marketplaces — must register for VAT in Kenya and charge 16% VAT on their supplies to Kenyan consumers. Registration is done through a simplified online portal. Non-residents may appoint a tax representative in Kenya. Failure to register may result in KRA blocking the platform's access in Kenya.

Import VAT

All imported goods are subject to VAT at 16% of the CIF (cost, insurance, freight) value plus customs duty. Import VAT is paid at the port of entry before goods are released. Certain imports may be exempt, including donated goods, personal effects, and goods for diplomatic missions. Import VAT can be claimed as input VAT by VAT-registered businesses.

FAQs

What is the penalty for late VAT filing?

Late filing attracts a penalty of KES 10,000 or 5% of the tax due (whichever is higher). Late payment attracts interest at 1% per month on the unpaid amount. KRA may also issue agency notices to bank accounts and third-party debtors.

Can I claim input VAT on imported services?

Yes, VAT-registered persons may claim input VAT on imported services subject to VAT at 16%, provided the services are used in making taxable supplies and the recipient has a valid E-TIMS invoice.

Are there VAT exemptions for agricultural products?

Yes, unprocessed agricultural products and agricultural inputs are generally exempt from VAT or zero-rated, depending on the specific product. Processed agricultural goods are usually subject to the standard 16% rate.

How do I get a VAT refund?

VAT refunds are claimed in the VAT return. KRA processes refunds within 30–90 days, subject to verification. Exporters and EPZ/SEZ enterprises may qualify for faster refund processing. KRA may conduct an audit before approving refunds.

Disclaimer

This guide provides general information about Kenyan VAT for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Kenyan tax advisor or the Kenya Revenue Authority for advice specific to your situation. InvestmentKit does not provide tax advice.