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  • a copy of the invoice showing the sale of the goods to the purchaser;

  • the export entry is duly certified by the proper officer of Customs at the port of export;

  • transit documents, such as copies of the bill of lading, road manifest or airway bill; and

  • in the case of sugar and all excisable goods, a certificate signed by the Commissioner of Customs Services that the goods have been examined and loaded into sealable vehicles or containers under a tamper-proof seal and the seal number duly endorsed on the export entry.


The exporter of services is required to maintain tax invoices showing that the services were provided to a foreign country recipient or an EPZ. However, the Commissioner of Domestic Taxes may seek to look into proof of payment from the exporter’s financial records, including bank statements. A service exported outside Kenya means a service that is provided for use and consumption outside Kenya.

Regulation 20, which was introduced by the Minister of Finance in June 2008, restricting the instances where services would qualify for exports, caused a lot of confusion. The Minister amended this regulation in his 2009 budget speech to provide more clarity. Services supplied in Kenya are now determined by the ‘use and consumption test’ and the physical location of the supplier. Therefore, where the supplier has a fixed physical establishment in Kenya and services are physically used and consumed in Kenya, the services will be deemed to be supplied in Kenya irrespective of the location of the payer.

This means that export of services takes place where the services are

used and consumed outside Kenya in accordance with the definition of export of services under the VAT Act.

However, the Regulation still needs to be further clarified to give a broader view of what constitutes ‘use and consumption’ in order to provide more certainty. The emphasis on ‘physically used or consumed’ may also create more confusion.

Refunds to foreigners

VAT refunds are not allowed to tourists or nonresident businesses.

Place, time and value of supply

Place of supply

The place of delivery is generally accepted as the place of supply in relation to goods. However, where the goods are made or provided in Kenya or imported into Kenya, the place of supply will be in Kenya.

Place of supply in relation to services is not clearly defined. The VAT Act makes reference to the terms ‘use’ or ‘consumption’ of the service in the definitions of both exported and imported services. However, the term ‘use’ and ‘consumption’ are not defined in the VAT Act, leading to subjectivity in their interpretation.

Time of supply

Output tax is due and payable to the Commissioner of Domestic Taxes once a tax point has been triggered, on the earliest of the following dates:

  • date of issue of an invoice for the supply;

  • date of full or partial payment for the supply;

  • date when the goods or services are supplied to the purchaser; or

  • date of issue of a certificate by an architect, surveyor or any person acting in a consultant or supervisory capacity in respect of the service.

Where taxable supplies are made on a continuous basis or where the supplies are metered, such as electricity, the tax point is the date of first determination of the supply (when the value of the supply is established) or the date of the meter reading for metered supplies.

Value of supply

The taxable value of any supply of goods or services is:

  • in the case of a supply by the registered person to an independent person dealing at arm’s length, the price at which the supply is provided, or the price at which the supply would have been provided in the ordinary course of business by a registered person to an independent person dealing at arm’s length and, in cases where no such price can be determined, the price decided by the Commissioner;

  • in the case of taxable goods imported into Kenya, the sum of the following amounts:

    • the value of such taxable goods ascertained for the purpose of customs duty, whether or not any duty of customs is payable on those goods;

    • the amount of customs duty, if any, payable on those goods; and

  • in the case of a taxable service imported into Kenya, the price at which the supply is provided.

For this purpose, the price of goods includes any amount charged for, or liability in respect of, packaging, containers, related services or commissions and the excise duty payable.

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