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number on a tax invoice or credit note.

The VAT legislation requires VAT- registered persons to display their registration certificates in a clearly visible place within their business premises. Failure to comply with the requirement will lead to the following:

  • a default penalty of KShs20,000; or

  • being found guilty of an offence and liable to a fine not exceeding KShs200,000 and interest payable on any outstanding balance at the rate of 2% per month compounded, or imprisonment for a term not exceeding two years, or both.

A PIN certificate is usually issued within a few hours of making the application online.


If a registered person ceases making taxable supplies, he must notify the Commissioner of the date of cessation and furnish him with a return showing details of all goods in stock and taxable assets within 30 days from the date the registered person ceased to make taxable supplies.

If the value of the registered person’s taxable supplies in any 12 months does not exceed KShs5 million and he does not expect any increase in such supplies in the next 12 months, he may also notify the Commissioner of deregistration.

Other reasons for deregistration include death, insolvency, goods becoming non-taxable, change of trading names and legal incapacitation. Where such changes occur, the registered person, the one charged with liquidation, the executor or any other person must notify the Commissioner without delay.

Output tax

Output tax means tax that is due on taxable supplies. Output tax is



computed by applying the VAT rate attributable to the supply to the taxable value of the supply. The VAT rate attributable to the supply will depend on whether it is a standard rated, a zero-rated or an exempt supply.


Exempt supplies

Businesses that deal exclusively in exempt supplies are not required to register for VAT and cannot claim relief from input tax on the goods and services that they consume. The exempt supplies include, but are not limited to:

  • financial services. (Previously, only financial services provided by banks, financial institutions and the Postal Corporation of Kenya were exempt from VAT. The Minister has introduced a significant change in the 2009 budget by providing a comprehensive list of what constitutes financial services. Financial services are now exempt from VAT, irrespective of the supplier.);

  • most basic foods, other than milk and milk products;

  • automotive fuels;

  • insurance and reinsurance services excluding:

    • management and related insurance consultancy services;

    • actuarial services; and

    • services of insurance assessors and loss adjustors;

  • education and training services;

  • medical, veterinary, dental and nursing services;

  • sanitary and pest control services provided to domestic households;

  • agricultural, animal husbandry and horticultural services;

  • social welfare services provided by charitable organisations;

  • burial and cremation services;

  • transportation of passengers by any means of conveyance, except where the means of conveyance is hired or chartered;

  • renting, leasing, hiring or letting of land, residential buildings and nonresidential buildings, excluding car park and conference or exhibition services;

  • local authority services;

  • insurance agency, insurance brokerage, stock exchange brokerage;

  • tea and coffee brokerage;

  • limited tour operators’ services;

  • trade, professional and labour association services;

  • transportation of tourists by any means of conveyance;

  • postal services;

  • sale of buildings;

  • telephone handsets for mobile and wireless networks;

  • hiring, leasing or chartering of zero-rated or exempt goods but excluding chartering of aircraft and hiring of buses;

  • certain entertainment services (plays, performances and sports events by approved charitable, educational or other institutions of a nonprofit nature);

  • entertainment performed wholly by artists who are resident in Kenya; and

  • limited hotel and accommodation services (by educational, medical, charitable or religious institutions subject to prior approval).

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