Value Added Tax Act, 2013 (Cap. 476)

What it saysVAT is charged at 16% of the taxable value on supplies of goods and services made in Kenya by a registered person in the course of business, other than zero-rated or exempt supplies.

What it means for your businessThe 16% rate is statutory, not a KRA choice. If someone quotes you a different rate on a standard supply, the Act — not the invoice — wins.

What it saysA person whose taxable turnover meets or exceeds KES 5,000,000 in any period of twelve consecutive months must apply to be registered for VAT.

What it means for your businessThe threshold is measured on rolling twelve-month taxable turnover, not calendar year, and it is the KES 5M figure per KRA's operative guidance (the reported KES 8M increase is tracked on our threshold explainer until KRA confirms it).

What it saysA registered person may deduct input tax on purchases used in making taxable supplies, subject to the documentary and timing conditions in the Act.

What it means for your businessYour claimable input VAT is tied to supplies that are themselves taxable — which is why exempt supplies poison input credit and why eTIMS invoices matter as evidence.

What it saysA registered person must file a VAT return and pay any tax due by the 20th day of the month following the tax period — including nil returns.

What it means for your businessThe 20th is a statutory deadline, not a courtesy reminder. Filing on time matters even when you owe nothing, because the penalty for missing it is not zero.

What it saysExcess input tax may be refunded or credited; claims must be made within twelve months of the date the excess arose.

What it means for your businessSit on a refund position too long and it expires. This deadline is the single most expensive thing credit-position SMEs ignore.

What it saysLists supplies taxed at 0% — including exports, unprocessed agricultural products, and specified medical and educational materials — with input VAT still claimable.

What it means for your businessZero-rated is not 'no VAT paperwork': you still invoice at 0%, file returns, and can build refund positions from claimed inputs.

What it saysLists supplies outside the VAT net entirely — including most financial services, insurance and education — on which no output VAT is charged and related input VAT is not claimable.

What it means for your businessExempt is often the worse outcome for a business: no output VAT but you also lose the input credit, so VAT on your costs becomes a real cost.