How To Register For VAT Obligation In Kenya – complete guide
This article is about how to Register For VAT Obligation in Kenya . We have already told you how to file KRA returns. Value Added Tax VAT is an indirect tax paid by the person who consumes taxable goods and services supplied in Kenya and/or imported into Kenya. A person must register for VAT if he supplies or expects to supply taxable goods and services worth Ksh 5 million or more in a year.
VAT operates under the system of input and output taxes where input tax refers to a tax paid by a registered person on the purchase of goods or services for the purpose of his business, while output tax refers to the tax charged on sales of taxable goods. or services. The difference between the two will indicate the tax payable by the taxpayer.
VAT-registered taxpayers should join eTIMS, a KRA software solution that provides real-time invoice transmission, improving accuracy in tax invoice filing and reconciliation between filed returns and payments. This is after the authority removed ETR machines from the Electronic Tax Register. eTIMS can be accessed through various electronic devices, including computers and mobile phone applications.
KRA has three types of VAT rates listed below
- 0% (zero rate): applies to certain categories of supplies listed in the second schedule of the VAT Act 2013.
- 8% – Applies to goods listed in Section B(1) of the First Schedule to the VAT Act 2013.
- 16% (general rate): applies to all taxable goods and services other than zero-rated supplies.
VAT registration requirements
- KRA PIN number
- PIN of a company’s members
- PIN of a company in a limited liability company
- Copy of the articles of association of a company.
- Copy of the company name registration certificate issued by the business register for individual entrepreneurs and partners
- National Identity Card
- Immigration card for foreigners
- Actual taxable turnover of Ksh 5 million or more in 12 months
- Physical commercial premises
- Active email address
- Access to the iTax portal
How to register for VAT obligation in Itax
- Start by logging into the iTax portal using your KRA PIN and password.
Once you have successfully logged in, locate the Registration tab and choose the “Edit PIN Details” option.
- In this section, opt for “Online Form” as the editing mode and continue by clicking “Next”.
On the Edit tab, check the box corresponding to your PIN.
- This action will reveal the sections you want to edit.
- Specifically, check the “Source of Income” box.
If there are no further changes, proceed to the “Obligations Details” tab.
- Here, check the VAT box and indicate the desired registration date, usually the application date.
- Provide an estimate of your billing for next year.
In the “Income Source Details” section, indicate your share of business income by selecting “Yes.”
- Proceed by entering your business details and click the “Add” button when finished.
- Indicate the sector of the economy in which your company operates.
- Remember to repeat the “Add” button step.
- You have the option of using your Business Registration Certificate or Single Business Permit for verification.
Concluding the process, click on the “Submit” button.
- Download the confirmation form, which you can also access from your iTax registered email.
After successfully accepting your VAT liability application, visit any KRA office with your confirmation receipt and company registration certificate for verification and approval.
Once approved, you can begin to apply for the VAT charged on your taxable supplies.
VAT is due by the 20th of the following month. This includes both returns and payments and is submitted online via iTax.
Remember to submit a zero VAT return if your company has no activity in a given month.
Obligations of the taxpayer with a VAT number
As a taxpayer, the KRA requires you;
- File your tax returns on time
- Pay penalties and interest (if applicable).
- Pay taxes due on time.
Notify the commissioner in writing of any name change, including your business name, address, place of business, or nature of business. Notification must be made within 21 days of the change.
Consequences of delay in tax payment
In compliance with tax legislation, the expected filing date is no later than the 20th of the following month.
In case of late submission, a penalty is imposed based on the highest amount of Kshs. 10,000 or 5% of the amount of tax due. Furthermore, late payment generates a penalty equal to 5% of the unpaid tax.
A late payment interest of 1% per month is applied to the outstanding tax until paid in full.
For more information or clarification, you can contact KRA
Phone Numbers: +254 20 4 999 999 , +254 711 099 999;