The 2012 worldwide VAT, GST and sales tax guide

K ENYA 373
Supplies VAT schedule Example
transportation of passengers
(excluding transportation for
hire)
Zero-rated Fifth, Part A Exportation of goods and
supplies
taxable services, goods
and services supplied to
export-processing zones and
transportation of passengers
by air carriers on international
voyages or flights
Zero-rated Fifth, Part B Milk, medicaments, seeds,
goods
vitamins, fertilizers and
agricultural machinery
E. Time of supply
The time when VAT becomes due is called the “time of supply”
or “tax point.” In Kenya, the tax point is the earliest of the following
events:
• The goods or services are supplied.
• An invoice is issued.
• Payment is received for all or part of the supply.
Other tax points apply in a variety of specific situations.
Imports. The time of the supply for imported goods is either the
date of importation, or the date on which the goods leave a duty
suspension regime.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is VAT charged on
goods and services supplied to it for business purposes. Input tax
is claimed by deducting it from output tax, which is VAT charged
on supplies made. Taxable persons must claim input tax within
one year after incurring the expense.
Input tax includes VAT charged on goods and services purchased
in Kenya and VAT paid on imports of goods and services.
Nondeductible input tax. VAT may not be recovered on purchases
of goods and services that are not used for business purposes (for
example, goods acquired for private use by an entrepreneur). In
addition, input tax may not be recovered on certain business
expenses.
Except for goods purchased as stock in trade, input tax is restricted
with respect to business expenses incurred on the following
items:
• Passenger cars and minibuses, and their spare parts
• Oils for use in vehicles (including motor vehicles and similar
vehicles), ships, boats and other vessels
• Furniture, fittings and ornaments of decorative items in buildings
other than items permanently attached to buildings or such
goods for use in hotels and restaurants subject to the approval
of the Commissioner General
• Household or domestic electrical appliances other than those
approved by the Commissioner General for use in the manufacturing
of taxable goods or the supply of taxable services