When you can claim input VAT in Kenya
The tests a Kenyan business must pass before claiming input VAT: registration, taxable use, an eTIMS invoice with your PIN, the seller's filing and timing.
By Achekam · · 5 min read · For Running a business businesses in Kenya
An invoice with VAT on it is not, on its own, a right to a refund of that VAT. In Kenya an input VAT claim holds up only when several things line up: who you are, what the purchase was used for, what kind of document you hold, what the seller did with the sale, and when you make the claim. Miss any one and KRA can disallow the claim even though you paid every shilling of the VAT.
Below are the conditions in the order a reviewer would test them, followed by a monthly routine that catches problems before they reach iTax.
Registered, and making taxable supplies
KRA says only VAT-registered businesses can claim input tax, and only on purchases used in making taxable supplies.
Both halves matter. A trader that is not registered for VAT has no input tax to claim, whatever its suppliers charged. A registered business can claim only where the purchase feeds its taxable sales. Purchases for private use, purchases tied to exempt sales and certain restricted items fail at this first step; purchases where input VAT cannot be claimed goes through them one by one.
The invoice test
The document behind the claim is where most disallowances start. Since 1 June 2023, Kenyan input VAT can be claimed only against TIMS or eTIMS invoices. KRA's FAQs are blunt: input VAT can be claimed only on TIMS or eTIMS invoices that were transmitted to KRA with the buyer's PIN, and not on manual invoices.
KRA's guidance on input tax deduction breaks the test into three parts. The claim needs a valid electronic tax invoice, or a customs entry, that:
- shows the buyer's PIN;
- was transmitted to KRA; and
- covers a sale the seller has declared in its own VAT return.
The third part sits outside your control. Your claim depends partly on your supplier's filing. That is a good reason to favour suppliers who invoice through eTIMS as a matter of routine, to check that your PIN is printed correctly before you pay a bill, and to follow up quickly when an invoice you hold does not show up where KRA expects it. A supplier who keeps sending paper invoices is costing you the VAT on every one of them.
Customs entries and non-resident digital suppliers
Two kinds of purchase do not come with an eTIMS invoice from a Kenyan seller, and KRA deals with both.
For imports, KRA allows input VAT on validated customs import entries whose status is settled or removed. Keep each entry with the shipment's paperwork and check its status before you rely on it.
For services bought from abroad through digital platforms, KRA allows input VAT on supplies from non-resident digital suppliers who declared the buyer's PIN on a line item. If an overseas software or advertising provider charges you VAT, make sure your PIN is on its records so it can declare the sale against you.
The six-month window
Timing is the condition people forget. Section 17 of the VAT Act, as consolidated on Kenya Law, allows input tax to be deducted within six months after the end of the tax period in which the supply or importation occurred.
KRA's own FAQs describe the six months as running from the date of supply or the invoice date, which is a slightly shorter reading. A practical way to live with the difference is to work to KRA's reading: aim to claim every invoice within six months of its date, and treat anything older as a question for your adviser before it goes into a return. In words, an invoice dated in March should be in a return well before the following September, not left in a drawer until someone finds it.
Late claims usually come from invoices that arrive late or sit unapproved. Chasing suppliers for missing invoices every month, rather than at year end, keeps you inside the window.
Supplier bills in Achekam, and a limit for Kenya
In Achekam a business records supplier bills line by line with VAT. A bill without a purchase order waits for approval before it posts, and it can be paid in full or in parts from a chosen bank account.
For eTIMS, Achekam lists a Kenyan business's supplier invoices that have no eTIMS reference recorded, so the business can see which expenses are at risk of being disallowed. That list is the most useful single screen for this topic: anything on it either needs its eTIMS reference recorded or should be kept out of the claim until it has one. Expenses at risk without an eTIMS invoice covers the income tax side of the same problem.
There is also a current limitation to plan around. Supplier bills and purchase orders do not yet use a Kenyan business's own VAT rate: they offer 15% or 0% and default to 15%. The input VAT on your bills in Achekam is therefore not a figure to copy into the return. Keep a separate claim schedule built from the eTIMS invoices themselves, and agree the method with whoever prepares your VAT return.
A monthly input VAT review
Run this before each VAT return:
- List the month's supplier invoices and imports you intend to claim.
- Open Achekam's list of supplier invoices with no eTIMS reference, and either record the reference or remove the invoice from the claim.
- Confirm your PIN appears correctly on every invoice being claimed.
- Compare your list with the figures KRA has pre-filled, and ask suppliers about any invoice KRA does not show.
- Check each customs entry's status and each foreign digital supplier's line-item PIN.
- Take out anything older than six months from its invoice date and refer it for advice.
- Remove purchases that serve private use or exempt sales.
- File the invoices and workings where your reviewer can find them.
KRA's FAQ on the auto-populated VAT return explains how returns are pre-filled from iTax, TIMS/eTIMS and customs data, what you must do to confirm them, and how to check whether an invoice is TIMS/eTIMS compliant. For checking a single supplier invoice before you pay it, see verifying a supplier's eTIMS invoice.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
