Doing Business in Kenya - RSM International

• In the context of rental of non-residential premises where service charge islevied for such services like security, cleaning, electricity, garbage collectionetc, it forms part of the taxable value and is subject to tax. However, where it isa mere reimbursement of payments made by the property manager/owner onbehalf of the residents, it will be considered as part of disbursement and will notbe subject to VAT.• The value of taxable services includes any incidental costs incurred by thesupplier, excluding any disbursements which the supplier has made as anagent of the client. Disbursements include costs incurred and recovered on anactual basis from the client without any mark-up. Where a mark-up is added,such disbursements are vatable, in which case an input VAT suffered on thedisbursement can be also be claimed.• The taxable value of imported goods is the sum of:• The value of the goods as ascertained for purposes of customs duty(whether duty is payable or not); and• The amount of customs duty actually paid.• The taxable value of imported services is the price at which the supply isprovided.• The taxable value of hotel accommodation and restaurant services shall excludeany catering levy and service charge where such service charge is distributedto employees and does not exceed 10% of the value of accommodation orrestaurant services.• The taxable value of mobile cellular phone services shall be the value determinedfor excise duty under the Customs and Excise Act.• In the case of hire purchase or lease agreements, the taxable value excludes anyinterest or finance charges.• Any interest charged for late payment shall be disregarded in determining thetaxable value.• Disposal of items of property, plant and equipment by an exempt person onwhich no input tax has been claimed are not subject to output tax on disposal.• In relation to samples, VAT is not charged in the following circumstances:• The goods are distributed free as samples by a registered person infurtherance of his business;• The samples have a value of less than Shs 200 for each sample;• Are freely available; and• Are distributed to at least 30 persons in any 1 calendar month.DOING BUSINESS IN KENYA49