VAT is a type of tax that is charged on the supply of taxable services or goods in Kenya and upon importation of taxable services or goods into Kenya. Businesses or individuals who have VAT obligations should make sure that they file their returns every month before the 20th of the following month, failure to which it attracts a fine of Kshs 10,000 or 5% of the VAT due, whichever is the highest. If you are wondering how to file VAT returns in Kenya then read on.
If you fail to file your monthly VAT returns you will get a fine of 10,000 for each month not completed. Remember to file a nil return if you have no VAT to declare to avoid being fined.
Who should register for VAT (value added tax)?
Any individual, a partnership, or a company that expects that its supply of taxable goods will be above Kshs 5,000,000 within a year should register for VAT.
VAT registration is done online through the iTax portal.
It is important to note that there are three types of VAT rates:
0% for the zero rated supplies. A list of zero rated goods can be found on the 2nd Schedule in the VAT Act and such goods can be goods supplied to the EPZ, public bodies, and privileged persons among others
16% this is the general rate for other services or goods
8% for petroleum oils, motor spirits such as aviation spirits
When is VAT Payable in Kenya?
VAT is due and payable when:
- Services or goods are supplied to the purchaser
- Upon the issuance of an invoice in regards to the supply
- Full or partial payment of the supply is received
- Upon the issuance of a certificate by a surveyor, architect, or any other consultant providing the service
How to file VAT return in Kenya on iTax
- Log in to iTax account; click on the returns tab and then click on file returns.
- Select value added tax (VAT) on the drop down menu and download the excel file by clicking on the download button. Select any of the first two download options.
- In your computer click on downloads folder and open the zip file and open the excel file.
- Once you have opened the excel file fill in all the necessary details accurately. Each of the worksheets requires specific information and if it pertains your business then fill in as required and if it does not then you omit.
- Complete the worksheet by following what is in your monthly z report and the expense records.
- The last section shows the VAT due and is also has a provision for you to record any credit brought forward.
- Once satisfied with the details, click on VALIDATE. It will generate a zip file and will be saved in your selected folders in your computer.
- Next, uploading the generated zip file
- You will submit the VAT spreadsheet in the zip format by following these steps:
- Login to iTax. Click on returns and select value added tax. Click on next
- Click on browse and upload the zip file from your computer. Click on agree on the terms and conditions and submit.
- If you VAT is a credit, no further step is required though it is good to download an acknowledgement receipt.
- If you have any amount payable, make sure you generate a VAT payment slip.
Generating the VAT payment slip
- You can generate the payment slip by clicking on the link follows immediately after submitting your return.
- You can also click on payment button and proceed to payment registration. The tax head should be VAT as well as the tax subhead, and the payment type is self-assessment.
- Select the liability and click on the add button, select mode of payment, and click on submit.
- Download the payment slip and make your payment through selected major banks in Kenya or through MPESA.