Adding VAT Obligation

To apply for VAT Obligation on iTax, follow these outlined procedures. But before we begin, it would be good to know what VAT is.

What is Value Added Tax (VAT)?

Value Added Tax is charged on supply of taxable goods or services made or provided in Kenya and on importation of taxable goods or services into Kenya.

Who Should Register For VAT?

VAT is for business people who have supplied or expect to supply taxable goods worth Kshs. 5,000,000 and above within 12 months. Those selling below 5,000,000 within a year should register for Turnover Tax (TOT).

How to Apply for VAT Obligation on Itax

1. Log into the iTax portal. You will require your KRA pin and password. You can get help on resetting if you forgot your KRA Pin password.
2. Click on Registration Tab and select Amend Pin Details.
3. Select Online Form as the Mode of Amendment, click next to proceed.
4. On the Amendment tab, click on the Pin check box. This will open up sections that you wish to amend. Click on Source of Income check box.
5. If there are no other amendments you wish to make, jump to Obligation Details tab. Tick the VAT check box and select the registration date which is usually the date you are applying. Indicate your estimated turnover for the coming year.
6. On Source of Income Details, indicate yes on business income option. Enter the business details and once done, click on add button. Select the sector of economy your business is involved in. Remember to click the add button. Note you can use either Business Registration Certificate or Single Business Permit.
7. The last step is to click on submit. Download the acknowledgement form. You can still get if from your iTax registered email.

After You Apply for VAT Obligation

After applying for VAT obligation visit any KRA office with the acknowledgement receipt and your business registration certificate for approval. Once registered, file for VAT charged on your taxable supplies through online monthly returns and pay any VAT due. However note that even if there is no business for a certain month, you must file Nil VAT return.

VAT Rates

There are 3 Types of Tax Rates;

1. 0% – for Zero rated supplies. Goods listed in the 2nd Schedule to the VAT Act e.g. Exportation of goods/services, goods supplied to EPZ, LPG, Privileged persons and Public bodies etc.
2. 8% – Petroleum oils obtained from bituminous, Motor Spirits (Diesel, Super, Aviation spirit etc.)
3. 14% – General rate for other Goods and Services

When is VAT payable?

It is important to note that tax is due and payable when;

• Goods or services are supplied to the buyer
• An invoice is issued in respect of the supply
• Payment is received for all or part of the supply
• A certificate is issued by an architect, surveyor or any person acting as consultant or in a supervisory capacity in respect of the service (whichever is earliest)

 Penalty for Late Filing and Paying

The date of filing is on or before 20th of the following month. Penalty on late filing whichever is higher between, Kshs. 10,000 and 5% of the tax due. Penalty on late payment is 5% of the tax due. There is a late payment interest of 1% per month on the unpaid tax until the tax is paid in full.