How To Register For VAT Obligation In Kenya
Value Added Tax VAT is an indirect tax that is paid by the person who consumes taxable goods and taxable services supplied in Kenya and/or imported into Kenya. It is important to note that VAT is charged, collected and remitted by VAT-registered persons only. Under the VAT law, it is an offence to charge VAT if one is not registered for VAT.
Only registered persons charge VAT as per the effective date of registration indicated on the certificate issued. Failure to charge VAT after registration is an offence. Charging VAT before registration is also an offence. Tax law also provides for voluntary registration. Currently, VAT registration is done through i-Tax platform.
Taxpayers registered under VAT are required to be onboarded onto eTIMS, a software solution from KRA that provides real-time invoice transmission enhancing accuracy in tax invoice declarations and reconciliation between filed returns and payments. This is after the authority retired the Electronic Tax Register ETR machines. eTIMS can accessed through various electronic devices including computers and mobile phone Apps.
How to register for VAT
VAT registration applications in Kenya are completed electronically using the ‘iTax’ system, which is administered by the Kenya Revenue Authority (KRA):
https://itax.kra.go.ke/KRA-Portal
There are two steps to the registration process:
• Step 1: the individual/incorporated entity must apply for a personal identification number (PIN) on the iTax platform.
• Step 2: once the individual/incorporated entity has
Value Added Tax (VAT)
Value Added Tax is charged on:
- Supply of taxable goods or services made or provided in Kenya, and;
- Importation of taxable goods or services into Kenya.
If you supply or expect to supply taxable goods and taxable services with a value of Kshs 5 Million or more in a year, you qualify to register for VAT.
The Law also provides for voluntary registration for persons who have made taxable sales less than the prescribed 5 million threshold for the purposes of trade
If you are registered for VAT you will be required to charge, collect and account for VAT on your taxable supplies and remit the same to KRA.
Read>>>How to file for Digital Service Tax on KRA itax Portal Step By Step Process
You are also required to submit online monthly returns on or before the 20th of the following month.
VAT Registration Requirements
- KRA PIN Number
- PINS of partners in a partnership
- PIN of a company in a Limited Liability Company
- Copy of incorporation certificate for a company
- Copy of business name registration certificate from the registrar of companies for sole proprietors and partners
- National ID Card
- Alien ID card for foreigners
- Actual taxable turnover of Ksh 5 million or more in 12 months
- Physical business premise
- Active Email Address
- Access to iTax portal
How to Register for VAT Obligation on iTax:
– Log into the iTax portal using your KRA PIN and password.
– Go to the Registration Tab and select “Amend Pin Details.”
– Choose the “Online Form” as the mode of amendment and click “Next.”
– In the Amendment tab, check the box next to your PIN to reveal modifiable sections.
– Tick the “Source of Income” box.
– Move to the “Obligation Details” tab, select the VAT checkbox, and enter your desired registration date (typically the date of application). Provide your estimated turnover for the next year.
– In the “Source of Income Details” section, select “Yes” for business income, input your business details, and click “Add.” Specify the economic sector of your business, then click “Add” again. Use either your Business Registration Certificate or Single Business Permit for verification.
– Click “Submit” to complete the process, then download the acknowledgment form (also available via your iTax registered email).
– Visit any KRA office with the acknowledgment receipt and your business registration certificate for verification and approval.
– Once approved, you can start filing VAT on taxable supplies.
Read>>>How to check your KRA Status and Penalties
Voluntary VAT registration
Voluntary VAT registration is possible in Kenya when the value of the taxable supplies is less than the KShs 5 million registration threshold and the business has a firm intention to make taxable supplies.
Tax Obligations
Pay As You Earn (PAYE)
PAYE is a method of collecting tax at source from individuals in gainful employment, including workers of Religious Organizations and foreign missions working in Kenya.
Gains or Profits include; wages, causal wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, gratuity, or subsistence, traveling, entertainment or other allowance received in respect of employment or services rendered.
If you are an employer you are required to register for this obligation.
As an employer you are required to deduct PAYE from your employees? salaries and wages at the prevailing rates and remit the same to KRA on or before the 9th of the following month
