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Introduction

Charge to VAT is also referred to as Charge to Tax under VAT law. In this post we will seek to answer the following questions:

1. What is Charge to VAT?
2. What are the applicable VAT rates in Kenya?
3. What is the Value of a supply?
4. What are the responsibilities of a registered person?
5. What is the VAT Due dates?
6. Who is Charged VAT in Kenya?
7. What is VAT on Imported goods?
8. What is VAT on Imported services?

What is Charge to VAT?

Charge to VAT is also referred to as charge to tax. In Kenya, VAT is charged on:

1. A taxable supply made by a registered person.
2. Imported goods.
3. Supply of imported taxable services.

Therefore, Charge to VAT refers to the whole process of levying VAT.

What are the Tax Rates In Kenya?

VAT is per cent based on the value of a supply with 3 tax rates.

1. Zero (0%) per cent on Zero-rated local supplies, exports and designated goods and services exempted from National Treasury.
2. Eight (8%) – a special rate on petroleum products.
3. Fourteen (14%) per cent – standard rate on the taxable value of:
   • The local taxable supplies.
   • Imported taxable goods.
   • Imported taxable services.

What is the Value of a supply?

VAT is charged on the value of a supply. The word value means the total cost of the item plus all other related goods, services and costs such as disbursement costs.

What are the Responsibilities of A Registered Person

A VAT-registered person making a supply subject to VAT has three responsibilities:

1. Charge VAT on a taxable supply.
2. Accounting for the VAT.
   • Issue tax invoices
   • Maintain tax records
   • Deduct input tax
3. File tax returns
4. Pay the VAT to the tax authority.

What is VAT Due date?

VAT is due at the time of supply.

1. Local supplies and imported services
2. Withholding VAT
3. Imported goods

Local supplies and imported services

That time of supply for local supplies and imported services is indicated by a certain date. That date is earlier of the following:

1. Date of the invoice.
2. Date services are performed.
3. Date of delivery.
4. Date of payment in full or part.
5. Date of a certificate of completion in civil works.

However, the person can delay remitting the VAT to the Commissioner till on or before the 20^th of the following month.

Withholding VAT

Withholding VAT must be remitted within 14 days from the date payment is made to the seller.

VAT on imported goods

VAT is due at the time of taking possessions of the imported goods.

Which Persons are Charged VAT?

VAT plus any other consideration is recoverable from the receiver of the supply. However, penalties and interest are not recoverable from the person receiving the supply. In case a taxpayer does not comply with the requirements of Charge to VAT, they will face the consequences from KRA.

What is VAT on Imported Goods?

VAT on imports is charged as if it was a duty of Customs. It is determined and collected by the Commissioner of Customs. The VAT is due and payable by the importer at the time of importation.

What is VAT on Imported Services?

VAT on imported services is due at the time of supply. VAT on imported services is the liability of the person receiving the imported services. The importer may be registered for VAT or not. What are the responsibilities of the importer of services?

1. The person accounts for the VAT.
2. The person pays the component of the VAT attributable to any exempt supplies.

Feel free to send us tax and investments in Kenya questions or topics via email taxkenya@gmail.com that you would wish to be covered in this Website.