Value Added Tax popularly (VAT) is one of the sources of revenue for the Kenyan Government. Value Added Tax is a consumption tax on goods and services charged at each stage of the supply chain where value is added, from production to the point of sale. VAT also applies to imported goods and services in the tax bracket. The VAT rate in Kenya is 16% for taxable goods and services as well as imports. 8% is the rate for the local supply of fuel, petroleum, oils, etc. 0% for exports, international passenger transport, and zero related supplies.
Any Kenyan supplying or who expects to supply taxable goods and taxable services with a value of Kshs 5 Million or more in a year is required to register for VAT. VAT on imported taxable goods and services is paid by the importer. Kenya Revenue Authority(KRA) requires persons and businesses with VAT obligations to complete their returns every month ahead of the 20th day.
Once registered for VAT, you are required to account for VAT charged on your taxable supplies through online monthly returns and pay any VAT due. VAT return refers to the form filled with the amount of Value Added Tax payable to the Kenya Revenue Authority. It contains information such as total sales, purchases, VAT refunds, etc.
Related: How to Pay Presumptive Tax in Kenya
How do I File VAT Returns in iTax?
1. Visit the iTax online portal site.
2. Log in to the iTax portal with your PIN and password.
3. Once you log in to your account, Navigate to the “Return” tab then “File Return” then “Value Added Tax“.
4. Download the “Excel File” which is the VAT Form.
5. Fill all the provided tabs on the excel sheet accurately.
6. Once filled “Validate” them, if the document generates errors, you will need to make appropriate corrections.
7. Create a “Zip File” and save the resultant zip file in your preferred folder for uploading.
8. Proceed to the iTax portal then log in to access your company profile.
9. Click on the “Returns” tab.
10. Select “File Return“.
11. On the drop-down tax obligation choose “Value Added Tax“.
12. Under the VAT tab, the “Return Period Form” field and the “Return Period To” field are seen.
13. Click on “Upload” and then locate your zip file to upload.
14. Confirm you have understood the terms and conditions.
15. Click the “Submit” button.
16. They will prompt you with an “Acknowledgment Number“.
17. Download the “Returns Receipt” using the link provided.