Who must register for VAT in Kenya?

Any business with annual turnover exceeding KES 5 million must register for VAT. Businesses below this threshold can register voluntarily.

What is the standard VAT rate in Kenya?

The standard VAT rate is 16%. Some goods and services are zero-rated (0%) or exempt. The 8% reduced rate was abolished by the Finance Act 2023.

Understanding VAT Returns in Kenya

Value Added Tax (VAT) is a consumption tax charged on most goods and services in Kenya at a standard rate of 16%. If your business is VAT-registered, you collect VAT from your customers (output VAT) and can reclaim VAT you paid on business purchases (input VAT). The difference is what you remit to KRA each month.

Who Must Register for VAT?

Any business with annual taxable turnover exceeding KES 5,000,000 must register
Businesses below this threshold can register voluntarily (beneficial if your buyers are VAT-registered)
Registration is done on iTax — you receive a VAT Certificate and obligation to file monthly returns

VAT Rates (Current as of 2026)

Standard rate: 16% — applies to most goods and services
Zero-rated (0%) — exports, basic foodstuffs (maize flour, milk, bread), agricultural inputs, medical equipment
Exempt — residential rent, financial services, insurance, education
Note: The 8% reduced rate (petroleum/LP gas) was abolished by the Finance Act 2023, effective 1 July 2023.

How VAT Works

If you sell goods worth KES 10,000 to a customer, you charge them KES 11,600 (KES 10,000 + 16% VAT). The KES 1,600 is output VAT that belongs to KRA.

If you also buy stock worth KES 5,000 from a VAT-registered supplier and pay KES 5,800 (KES 5,000 + KES 800 VAT), the KES 800 is input VAT you can reclaim.

Your monthly VAT liability = KES 1,600 (output) − KES 800 (input) = KES 800 remit to KRA.

Filing Your Monthly VAT Return

Log in to iTax → Returns → File Returns → VAT Return
Select the return period (e.g., March 2026)
Enter your output VAT (from your sales) and input VAT (from purchases with eTIMS invoices)
Submit by the 20th of the following month
Pay any net VAT owed via M-Pesa or bank transfer

Using KompliTax for VAT

KompliTax calculates your monthly VAT position automatically from your transactions — showing you output VAT collected, input VAT paid, and the net amount owed to or refundable from KRA. Use this figure when filling in your iTax VAT return. All transactions have eTIMS invoices, so your input VAT claims are fully supported.