The 2012 worldwide VAT, GST and sales tax guide

K ENYA 375
The Commissioner General may refund tax in any of the following
circumstances:
• Taxable goods are manufactured in or imported into Kenya and
tax is paid with respect to such goods and, before being used,
the goods are exported under customs control.
• Tax is paid in error.
• In the opinion of the Minister of Finance, it is in the public
interest to refund tax.
A claim for tax paid in error must be filed within a period of one
year after the date on which the tax was paid.
VAT on bad debts accounted for and paid by a registered person
can be claimed after a period of three years from the date of such
supply or it can be claimed if the person liable to pay the tax has
become legally insolvent. However, it must be claimed no later
than five years after the date of the supply. If legal insolvency
does not apply, evidence of the effort to recover the tax is
required to support such claims.
G. Recovery of VAT by nonresidents
Kenya does not refund VAT incurred by a foreign business, unless
the foreign business has a permanent establishment in Kenya and
it is registered for VAT in Kenya.
H. Invoicing
VAT invoices and credit notes. A supplier of taxable goods and
services must issue a tax invoice to the purchaser at the time of
supply. Simplified tax invoices may be used if the sales to any
one person in a day do not exceed KSH 500.
A credit note may be used to reduce the VAT charged on a supply
of goods or services. Credit notes must show the same information
as a tax invoice.
Proof of exports. Goods and services exported from Kenya are
zero-rated. How ever, to qualify for zero rating, exports of goods
must be supported by evidence that proves the goods left Kenya.
Suitable evidence includes the following documents:
• A sales invoice
• A bill of lading, road manifest or airway bill
• A certified (endorsed) export entry (Form C17 [formerly Form
C63])
• For sugar and other excisable goods, a certificate of exportation
signed by the Commissioner of Customs and Excise
A service exported out of Kenya means a service provided for
use or consumption outside Kenya, regardless of whether the
service is performed in Kenya, outside Kenya or both inside and
outside Kenya. However, to qualify for zero rating, exports of
services must be supported by a copy of the invoice showing the
sale of the services to the purchaser.
Foreign-currency invoices. Foreign-currency invoices are dealt
with in the same way as invoices in local currency. The tax
authorities do not require a standard exchange rate to be used to
convert the value of foreign invoices into Kenyan shillings (KSH).
In practice, they accept the rate used by the taxable person, if the
rate used is within the prevailing market exchange rates.