Doing Business in Kenya - RSM International

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The VAT rates applicable in Kenya are:RateStandard rate (including hotels, restaurants and rent from non-residential buildings) 16%A lower rate applicable to diesel oil, industrial fuels and electrical energy 12%Zero-rated supply includes:Supply of specified goods and services listed in the Fifth Schedule0%Export of goods and taxable servicesSupply of goods and services to EPZ enterprisesShip stores to international sea and air carriersSupplies to designated foreign aid funded capital investment projectsSupplies to cotton ginning factories, film producersSupplies of computer hardware and software, generator, dental, medical, veterinaryand agricultural equipment and supplies (including seeds, fertilizers, pesticides andagricultural tools)Catering levy for hotels and restaurants 2%• An exempt supply is a supply of goods specified in the Second Schedule ora supply of services specified in the Third Schedule of the VAT Act. Where aperson makes exempt supplies:• No tax is charged on the exempt supplies.• The value of exempt supplies is disregarded in determining the annualregistration threshold.• Any input VAT suffered in the provision of exempt supplies is not deductibleas input VAT and is therefore a cost to the person.• A zero-rated supply is a supply of goods and services listed in the Fifth Schedule, whilethe Eight Schedule provides a list of special goods, privileged persons and institutionswhich enjoy a zero-rated status. Where a person makes zero-rated supplies:• No tax is chargeable on the supply; but• The supply will in all other respects be treated as a taxable supply (includingin determining the registration threshold).• Taxable supply refers to the supply of any other goods or services which are notexempt or zero-rated, and are deemed to be taxable at the standard rate of 16%or the lower rate of 12% as stipulated under the First Schedule.• A hotel is defined as premises on which accommodation is supplied or availablefor supply, with or without food and includes serviced flats, serviced apartments,beach cottages, holiday cottages, game lodges, safari camps, bandas, holidayvillas and other premises or establishments used for similar purposes, excludingpremises on which the only supply is under a lease or license of not less thanone month or where there is a prior arrangement with the occupier requiring noless than 1 month’s notice to vacate. A hotel or a restaurant is required to charge2% catering levy in addition to the VAT.44DOING BUSINESS IN KENYA
4.8.2 Application for RegistrationA person who meets the registration requirements should, within 30 days ofbecoming a taxable person, apply for registration. Such registration is done onlineon the KRA website.Voluntary registration is permissible under the law and is granted at the discretion ofthe Commissioner. A group of companies which is owned or substantially controlledby another person, subject to the discretion of the Commissioner, may apply to beregistered and treated as one person. In the absence of a group registration, alltaxable transactions between group companies are subject to VAT.Where a person who is related to another owns, operates or controls one or morebusiness entities, the value of his taxable supplies for the purposes of registrationshall be the aggregate value of the taxable supplies of all the business entities owned,operated or controlled by that person.Every registered person is required to display the registration certificate in a clearlyvisible place in his business premises. Where a person has more than one place ofbusiness, certified copies (certified by the Commissioner) must be displayed in eachof those places.4.8.3 Pre-registration Input VATOn the date of registration, where a person has stocks on which VAT had been paidand which are intended for use in making taxable supplies; or has constructed abuilding or civil works or has purchased assets for use in making taxable supplies,such a person may within 3 months of registration or such longer period as allowed bythe Commissioner, claim the input tax charged thereon. Input VAT can be claimed onpurchases done within 24 months preceding the date of registration. An applicationin the prescribed form has to be made to the Commissioner, and input tax can only beclaimed in the next return following the authorisation by the Commissioner.Where a registered person making exempt supplies which subsequently becometaxable, he may within 3 months claim input VAT on the supplies purchased in the24 months prior to them becoming taxable and which are in stock at the date of theregistration.DOING BUSINESS IN KENYA45
Page 7: 2.0 General2.1 IntroductionKenya li
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Page 15 and 16: A huge chunk of the Act regulates m
Page 17 and 18: • Stamping of the Memorandum of A
Page 19 and 20: the Registrar within a statutory pe
Page 21: 3.2.3 Thin CapitalisationThin capit
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Page 26 and 27: territory or domestic market. Motor
Page 28 and 29: • Unrealised foreign exchange los
Page 30 and 31: 4.2.6 Business with Non-Resident Pe
Page 32 and 33: Installments Due Date RateNon-Agric
Page 34 and 35: The current Personal Income Tax rat
Page 36 and 37: c) Housing• The higher of market
Page 38 and 39: partnership in which the husband or
Page 40 and 41: (1) East African Community partner
Page 42 and 43: Where the taxpayer still disputes w
Page 46 and 47: 4.8.4 De-registration and Disposal
Page 48 and 49: • Payment is received for all or
Page 50 and 51: 4.8.7 Records, Invoices, Credit and
Page 52 and 53: A credit note should be serially nu
Page 54 and 55: However, where a motor vehicle or o
Page 56 and 57: Where there is no tax payable a ‘
Page 58 and 59: granted or is partly granted, the b
Page 60 and 61: • Airtime on cellular mobile phon
Page 62 and 63: Transit VisasThese are visas requir
Page 64 and 65: Class K is for persons who have an
Page 66 and 67: 5.3.2 WagesAlthough the Employment
Page 68 and 69: NSSF provides the employee with a l
Page 70 and 71: 6.0 ACCOUNTING6.1 Statutory Framewo
Page 72 and 73: 7.0 INTELLECTUAL PROPERTYRIGHTSKeny
Page 74 and 75: Years 1 Shs 1,000Year 2 Shs 1,500Ye
Page 76 and 77: 8.0 Listing Rules8.1 The Capital Ma
Page 78 and 79: • At the date of application, the
Page 80 and 81: 8.3 Payable FeesCompanies pay an in
Page 82 and 83: 9.0 Investing in Kenya9.1 General I
Page 84 and 85: 9.3 Foreign Ownership of Shares and
Page 86 and 87: Contact Details - RSM AshvirRSM Ash
Page 88 and 89: Appendix of Acronyms used in the Bo
Page 90: Notes90DOING BUSINESS IN KENYA

Doing Business in Kenya - RSM International

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