Time of supply for VAT purposes is an important aspect. Indeed, failure to comply with requirements for time of supply creates discord between taxpayers and the tax authority, which may result in tax penalties and interest.
a. Time of supply for goods.
b. Time of supply for services.
Question
What is the time of supply for VAT?
Time of Supply for Goods and Services
VAT is due at the time of supply for:
- Local supplies (goods and services).
- Imported services.
The time of supply is at the date of supply. That date is referred to as a Tax Point.
Tax Point
A Tax point is the earliest of the following dates for any supply:
- Date goods are delivered in part or whole.
- Date services are performed.
- Date of an invoice for the supply.
- Date certificate is issued in civil works.
- Date payment is received in part or whole.
Goods Supplied Continuously
For goods supplied using vending machines, meters or other devices operated by use of coins, notes, or tokens:
The tax point is the date the coins, notes, or tokens are taken from the machine, meter, or other device. It is by or on behalf of the supplier.
Conditions
There are three conditions:
- Goods are supplied under the rental agreement.
- Goods or services are made by metered supplies or under an agreement or law that provides for periodic payments e.g. electricity.
- Goods and services are successfully supplied – earlier of when payment is due or received.
Time of Supply for Imported Goods
Time of supply for imported goods is when:
- Goods cleared for home use directly from port of importation or removal to an inland station – at customs clearance time.
- Goods removed to a licensed warehouse after importation – at the time of final clearance from the warehouse for home use.
In case the goods are removed from an export processing zone (EPZ) – at the time of removal for home use. In any other case, it is at the time the goods are brought into Kenya.
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